Class 
Book. 




L2£ 







Copyright^ 



JO 



COPYRIGHT DEPOSIT 



MANUAL 

OF 

Cost Engineering 



AND 



Estimating 

for 

Paper Box Manufacturers 

BY 

ROBERT S. DENHAM 



WITH 

ADDENDA 

BY 

JOINT COST COMMITTEE 




CLEVELAND 

ROBERT S. DENHAM 

CONSULTING COST ENGINEER 
19 17 






Copyright 1917 

by 

ROBERT S. DENHAM 

International Copyright 

All Rights Reserved 



/ 



Printed by 
The Gardner Printing Company 
Binding by 
Forest City Bookbinding Co. ___ 

Cleveland OCT 13 1917 



©GLA477055 

-vu> ( 



Preface 

Seven years ago the Western Paper Box Manufac- 
turers' Association became aroused to the importance of 
determining the cost of production in the factories of its 
members. A Cost Committee was appointed which de- 
voted many days and evenings to a thorough investiga- 
tion of the various methods of costfinding used by the 
members, and procurable from accountants and others. 

In the final analysis the Committee decided that the 
Cost Enginering methods offered by Mr. Robert S. Den- 
ham were the most practicable for general adoption and 
use throughout the industry. 

At the convention of the Association in January of 
the following year Mr. Denham gave a practical demon- 
stration of the methods, in connection with the report of 
the committee, which advised their adoption. The work 
of the Committee was approved and the installation of 
Denham Systems recommended. 

During several years thereafter a considerable num- 
ber of paper box manufacturers had the systems installed 
in their factories. Those who made use of them re- 
ported the results as very satisfactory. 

The expense of installation, a disinclination to give 
time and energy to the study of new methods, and a mis- 
taken belief that clerical work was non-productive, there- 
fore unprofitable, led many manufacturers to retain the 
traditional methods rather than make a change to the 
new. 

About two years ago another Cost Committee of the 
Western Association made a serious effort to procure a 
simple formula, which could be adopted and used 
throughout the industry, without the employment of out- 
side assistance for installation. Their report did not meet 
with the approval of the Association. 

In July, 1916, a Joint Cost Committee, composed of 
members of the Western Paper Box Manufacturers' Asso- 



4 Manual of Cost Engineering and Estimating 

ciation, the Central Paper Box Manufacturers' Association, 
and the New England Paper Box Manufacturers' Associa- 
tion, with the president of the National Federation of 
Paper Box Manufacturers' Associations as chairman, was 
appointed. 

This Committee made an exhaustive study of the sys- 
tems in use and available up to the present time. Their 
report, presented at the Western Association Convention 
at Chicago in January, 1917, is given in a somewhat ab- 
breviated form in the body of this book. It agreed fully 
with the findings of the first Committee that the Cost 
Engineering methods employed in the Denham Systems, 
which have been in practical use for several years in a 
number of important paper box factories, fully proves 
up to the ideal sought by the Committee. 

After consultation with Mr. Denham, a plan was de- 
veloped by which it is believed that the paper box in- 
dustry can be made sufficiently familiar with Cost Engi- 
neering methods to use them in making estimates instead 
of the traditional "material-labor-overhead" formula the 
Committee so ably shows to be unreliable and inefficient. 

This plan was set forth in the resolution presented 
herewith. This resolution has been passed and approved 
by formal action by all of the territorial Associations in- 
cluded in the Federation. 

Whereas, Robert S. Denham, President of the Denham Cost- 
finding Company, Cleveland, Ohio, agrees to prepare copy for, 
and have printed in suitable quantity a book of the following de- 
scription : 

Approximately 300 pages 6x9"; type, 10-point for text and 
8-point for notes and descriptive matter in connection with 
diagrams and illustrations; paper of suitable character and 
weight; binding, buckram or other substantial stiff binding; con- 
tents to comprise (1) a comprehensive and practical Manual of 
Costfinding for Paper Box Manufacturers, presenting such ex- 
planation and examples of the principles and rules for applica- 
tion of the Denham Costfinding methods to paper box factories 
as will make such application and usage clear to the intelligent 
student, and (2) in the form of addenda, prepared jointly by 
Mr. Denham and a Committee appointed by the Paper Box Manu- 
facturers, a schedule of average operation-hour costs of the vari- 



For Paper Box Manufacturers 



ous processes used in the paper box industry, calculated upon and 
compiled from the experience and confidential cost records of 
users of Denham Costfinding systems, together with certain valu- 
able tables for use in estimating and calculating the cost of ma- 
terials. The copy before being placed with the printers shall be 
submitted to the Committee of Paper Box Manufacturers for their 
criticism or approval. 

The price of the book is to be $10.00 per copy net. Mr. 
Denham further agrees that at the request of the Committee and 
under its authority he will arrange and compile from time to 
time revised schedules of composite or averaged rates for publica- 
tion by the Box Manufacturers' Committee at an approximate fee 
of $150.00 per issue. All original information and sources of 
same to be confidential and unknown to any person outside of 
the Denham Costfinding Company's organization. Now, there- 
fore be it 

Resolved, That in consideration of the labor and expense in- 
volved in the preparation and publishing of the above described 
Manual of Costfinding and addenda thereto, that the Paper Box 
Manufacturers, through their Committee subscribe for not less 
than 250 copies of said book, at the price of $10.00 per copy 
net, and be it further 

Resolved, That in consideration of the fact that the Denham 
Costfinding Company has developed the best known methods of 
determining the cost of manufacturing paper boxes, that it is 
regularly engaged in the business of providing competent cost en- 
gineering service, for the installation of Cost Systems in factories, 
and that in placing the results of its large and successful experi- 
ence at the disposal of the paper box manufacturers in printed 
form, it assumes certain risks of unfair usage and injurious criti- 
cism of methods by reason of inexperienced persons attempting 
to make installation without sufficient study or knowledge of their 
problems; we hereby agree, as far as practicable, to protect the 
legitimate interest of the Denham Costfinding Company by refrain- 
ing from the employment of any person or persons outside of 
our regular factory organizations for the service of installing a 
Cost System modeled upon the methods described in Mr. Den- 
ham's book, unless the employment of such person or persons 
shall be approved by the Denham Costfinding Company, and all 
paper box manufacturers are advised hereby that it is the sense 
of this meeting that it will be to their interest and profit, when the 
installation of the Cost System is decided upon, to engage the serv- 
ices of the experienced engineers who have developed these 
methods, rather than risk loss of profits through inferior in- 
stallation by less experienced individuals. Now, again, be it 
further 



6 Manual of Cost Engineering and Estimating 

Resolved, That the Presidents of the Western Paper Box 
Manufacturers' Association, the Central Paper Box Manufacturers' 
Association, and the New England Paper Box Manufacturers' As- 
sociation, be advised and requested to appoint two members each, 
one a user and one a non-user of the Denham systems to form 
in conjunction with the President of the National Federation a 
Committee of seven to carry out the plan provided in these reso- 
lutions. 

The manuscript copy of the book was presented at a 
meeting of the Joint Cost Committee, held at Reading, 
Pa., July 17, 1917. It received the unanimous approval 
of the committee. 

It is the hope of the Joint Cost Committee, the of- 
ficers of the National Federation of Paper Box Manu- 
facturers' Associations, and those progressive paper box 
manufacturers who have proven the practicability of 
these methods by actual usage, that the industry as a 
whole will as soon as possible adopt the more practicable 
methods as set forth herein. 

A. G. BURRY, 
President National Federation of 
Paper Box Manufacturers' Associations. 

HENRY L. STORTZ, 
Secretary Joint Cost Committee. 



Synopsis 

CHAPTER ONE 
Introduction 

Objects of This Book — Warning to Reader — Book Not Ex- 
pected to Make Cost Engineer of Reader — Mistakes of Previous 
Students of Costfinding — Formulae Not Dependable as Means of 
Determining Cost — Ratio of Productive to Non-Productive Labor 
Not Gauge of Efficiency — Examples by H. L. Gantt — Cost En- 
gineering Does Not Discredit Accounting in Rs Own Field — Cost 
Engineering Solves the Problem of Costfinding — Has Passed Ex- 
perimental Stage — Duties of Man Developing New Idea — Limit 
of Paper Box Manufacturer's Opportunity for Observation — Dis- 
tinction of Principles and Rules — How to Study this Book 17 

CHAPTER TWO 
What is Cost? 

Definition of Cost — Definiteness of Expense Factors — Pur- 
pose of Cost System — When Cost has Been Determined — Factory 
Compared to Department Store— The "Fair Deal" as the Basis of 
Business — Hurley on Unfair Competition — Common Misconcep- 
tions of Cost System — What does Not Constitute a Cost System — 
Omission of Expenses by Majority of Manufacturers — Material 
Rems in Manufacture of Paper Boxes — Expenses of Selling, Mak- 
ing and Delivering — How Expenses Must be Charged — True Cost 
Source of Profit, also Satisfaction to Both Manufacturer and 
Patron — Clerical Work Required by Cost System — Degree of 
Accuracy Desirable — Practicability a Prime Factor — Success of 
Installation Dependent upon Skill of Engineer — Cause of Present 
Deplorable Conditions of Competition 27 

CHAPTER THREE 
Advantages of Knowing Cost of Production 

The Buyer's Query — Universal Desire for Reward — Ways of 
Increasing Profits — Delusion of Wages as Cost Basis Responsible 
for Serious Losses — Dangers of Percentage Greater in Complex 
than in Simple Factories — Causes of Unfair Competition — Small 
Orders Though Desirable Need Careful Attention to Prevent Loss 
— Financing the Experiments of Others — Cost Records as Founda- 
tion for Estimating — Analysis of Expenses Provided in Cost Sum- 



8 Manual of Cost Engineering and Estimating 

mary — Comparison of Records to Determine Causes of Fluctua- 
tions in Cost — Comparison of Expenses with Charges — User of 
Rule-of-Thumb Outdistanced by Man Who Knows — Profitableness 
of Intelligently Directed Effort — Meeting the "Shrewd" Buyer — 
Money Necessary But Not Object of Life — Happiness the Great 
"Desire" — Summary of Advantages 37 

CHAPTER FOUR 
Necessity for Advanced Methods 

When Accuracy Was Unimportant — Origin of Cost Account- 
ing — Demand for Definite Figures — The Makeshift Percentage 
Formulae — The Change from Simple to Complex Methods of 
Manufacture — Changes in Cost Accounting Formulae — Introduc- 
tion of Labor Saving Machine Tools — Effect on Costs — Failure of 
Percentage Formulae to Meet the New Conditions — The Demand 
for Individuality in Product Cause of Great Diversity — Rapid 
Development of Machines Creates Grave Problems — The Three 
Essentials of Modern Cost Systems 45 

CHAPTER FIVE 
Comparison of Cost Accounting and Cost Engineering 

Principles of Cost Engineering Unknown to Cost Account- 
ants — Reliance upon Formulae Taught in Cost Accounting Litera- 
ture — Investigation of Methods and Report of Joint Cost Com- 
mittee — Purpose of Records — Requirements of Ideal System — 
Remarkable Diversity of Methods Used in Representative Plants 
— Necessity of Correct Distribution of Expense — Methods of Cost 
Accounting — Percentage on Material — On Labor — On Prime Cost 
— On Man Hours — On Unit of Product — Inadequacy of Foregoing 
Methods — Examples of Paper Box Cost Calculations, by H. L. 
Stortz — Cost of Shipping and Delivering — Table and Chart Show- 
ing Lack of Relation Between Wages and Other Expenses — State- 
ment of Cost Engineering — Suggestions to Student of Cost 
Engineering 53 

CHAPTER SIX 
Importance of Time Factor in Cost Engineering 

Definition of Term "Time" — Product a Combination of Ma- 
terial and Process Time Items — Wages Paid for Personal Time — 
Piecework Rates Have Time Basis — Machine Time- — Manual or 
Personal Time — All Expenses of Factory Operation Related to 
Time — Time Reports More Profitable for Cost Work than for Pur- 
pose of Espionage — Chargeable Time — Time is Money, a Truism 



For Paper Box Manufacturers 



in Cost Determination — The Manufacturer a Dealer in Time as 
Well as Material — Object of Effort — Profits Not Production — 
Functions of Time Report — Time Report a Vital Factory Record. 
83 

CHAPTER SEVEN 

Practical Application of Average Rates 

Purpose of Cost System — Unchangeable Nature of Cost of 
Completed Product — Variation in Product and Demand — Stability 
of Price Desirable — Peculiar Requirements of Men Who Are 
Habitually Careless — System Must be Practical Under All Condi- 
tions — The Limitations of the Law of Averages — The Use of 
Averages in Costfinding — Averaging Volume of Product — Averag- 
ing Expense per Unit of Product to Determine Cost Rates — Periods 
over Which Averages Should be Made — Comparison of Monthly 
and Yearly Averages — High Hourly Rates Not Indication of High 
Production Cost 91 

CHAPTER EIGHT 

The Compilation and Use of Production Records 

How Manufacturers Fool Themselves with Display of Figures 
— Whose Rusiness Is It? — Vital Nature of Facts — Mistaking Error 
for Truth — Tendency of the Thoughtless to Follow Traditions — 
System and Red Tape — Scope of Cost System— Demand for Ad- 
vance Estimates — Necessity for Production and Cost Records as 
Rasis of Estimates — Records as a Means of Setting Standards — 
Inadequacy of Delayed Information — Outline of Practical Record 
— Uses of the Production Record — Machine Ruilders' Capacity 
Rating Compared to Actual Average Performance — Records 
Worthless Unless Used 103 

CHAPTER NINE 

Planning a Cost System 

Cost System Defined — Function of Cost System — Its Import- 
ance — Who Should Operate It — Factors in Successful Installation 
— Who Should Make Installation — Cooperation of Every Indi- 
vidual Essential — Qualifications of Engineer — Authority and Re- 
sponsibility — Making Survey — Making Plan — Time and Output 
Records — Types of Factory Divisions — Importance of Accuracy 
— Mechanical Recorders— Time Report a Charge Slip — Material 
Records — Perpetual Inventories — The Cost Memorandum — Tracer 
System — Inventory of Work in Process — The Record of Hours — 
Split Time Record — The Monthly Summary — Necessity for Care 
in Expense Distribution — Advantages of Cost Engineering Ill 



10 Manual of Cost Engineering and Estimating 

CHAPTER TEN 

Installing a Cost System 

Difference on Factors— Inaccuracy in Rate Compared to In^ 
accuracy in Result — Why Manufacturers are Satisfied with In- 
ferior Systems — Many Concerns Insolvent Without Knowing It — 
Losses Unrecognized Because Records are Inadequate — Law of 
Action and Recreation Inexorable — All Losses Must be Offset by 
Gains Before Profit Can be Realized — Financial Bankruptcy and 
Moral Bankruptcy — Profitableness of Following Instructions of 
Engineer — Making Installation — Instructing Workmen — Foremen's 
Duties — Cost Clerk's Work Outlined — Finding the Lot Cost — Com- 
parison of Cost with Estimate — Filing Records for Reference. .123 

CHAPTER ELEVEN 

Making the Summary 

Object of Summary of Costs — Who Should Make Summary — 
Preparation of Data — Direct and Indirect Expenses Defined — 
What Can be Combined for Distribution — Generalization Objec- 
tionable in Cost Engineering — Arrangement of Expense Items — 
Effect of Wrong Method of Charging — Why Process Costs Must 
be Determined — No Expense is Basic — Order of Consideration — 
Relation of Expense to Means of Distribution — Danger of Indif- 
ference to Variation in Conditions — Fundamental Principle of 
Expense Distribution — Degree of Accuracy Required — Factory 
Individuality Makes Uniform Systems Impractical — Suggested 
Grouping of Expenses — Exceptions Likely — Importance of Small 
Discrepancies — Common Bases of Distribution under Cost En- 
gineering — Variations from Rules Illustrated — Finding the Cost. 
............... . =. 129 

CHAPTER TWELVE 

Practical Estimating 

Records a Safer Guide than Recollections — Laxity a Cause 
of Inefficiency — Groups of People Change Less Rapidly than In- 
dividuals — Stability of Output Average in Individual Factory — 
Impracticability of Using Borrowed Records — How to Compare 
Hourly Cost Rates and Production Costs — Basis of Estimates — 
Example of Estimating from Records — Guesswork Eliminated — 
Classifying Product for Estimating Data — Estimating is Price- 
y making — The Point that Insures Fairness — Estimating Blanks- 
Fundamental Requirements — Checking the Work of the Estima- 
tor — Lists of Materials and Processes — Suggestions 141 



For Paper Box Manufacturers 11 

CHAPTER THIRTEEN 

Selling Prices 

Selling Prices of Paramount * Importance — The Bugaboo of 
Fear — The Buyers' Trick — Futility of Efforts to Destroy Com- 
petition — Price Agreements — Introspection Overlooked — Cost, Ef- 
ficiency and Management — The Bight Price — Basis of Prices in a 
Seasonal Business — The Fundamentals of Price Making — Natural 
Price and Cost — Market Price — Supply and Demand — Selling 
Plows under Free Competition — Effect of Volume of Production 
on Prices — Prices should Bise and Fall with Costs — Losses by 
Fire and Failures — The Crime of Selling Below Cost — Composition 
of Fair Prices 157 

CHAPTER FOURTEEN 

Figuring Percentages and Profits 

Nine Out of Ten Business Men Do Not Know How to Figure 
Profits Correctly — School Textbooks Teach Wrong Methods — How 
Ignorance Cost Contractor $7,500 per Year — Example of Methods 
for Merchandising — How a Paper Box Factory Management 
Fooled Itself — Using Profit on Sales of Material to Operate a 
Losing Factory — Setting Long Price to Permit Several Discounts 
— Bule for Figuring Profits — Examples of Incorrect Bules in 
School Arithmetics — Losing Money While Figuring to Make Profit 
— Comparative Bules for Figuring Expenses, Interest, Dividends, 
and Profits 177 

CHAPTER FIFTEEN 
The Fetish of Uniformity 

How Organizations are Misled by Unattainable Ideals — Mis- 
taking Mechanism for Principle — Standardization — Principles 
and Arbitrary Standards — Standard or Uniform Cost Systems Im- 
practical — Standardized Costs Interesting But Unreliable — Violat- 
ing the Fundamental of Justice — Belative Value of Uniformity 
Compared to Accuracy — Besolutions Cannot Change Facts — 
Principles Only Basis for Permanent Standards 189 

CHAPTER SIXTEEN 

The Psychology of Commercial Success 

All Business is Buying and Selling — Manufacturer a Dealer 
in Time and Materials — Skilled and Unskilled Workers — Selling 
Service — What is Good Will — Individual Independence Impos- 
sible — Psychology, the Science of Mind — Comparative Value of 



12 Manual of Cost Engineering and Estimating 

Mental and Physical Effort — The Scope of Machinery — The En- 
gineering Age — The Engineer the Man of the Future — The Dis- 
organized Mind and the Orderly Mind — Fear — Mental Effect of 
Cost Sheet — Mental Effect of Untidy Office — A Choice of Partners 
— The Elements of Successful Business 197 

CHAPTER SEVENTEEN 

Getting the Most Out of Your Business 

The Age of Specialization — The All-Round Workman a Poor 
Workman — Necessity for Organization — Definite Lines of Au- 
thority and Responsibility — The Chaotic Factory — The Organized 
Factory — Charts — Object of Business — Effect of the "Filler" on 
Business — Limited Range of Effort — Volume Not Vital — The Part 
of the Price that Really Counts — Armour on "Sentiment" Effect 
of Feelings — Value of Analysis — When a Transaction is Really 
Completed — The Importance of the Margin of Service 209 

CHAPTER EIGHTEEN 

Pitfalls in the Pathway to Profits 

The Causes of Failure — Effect of Conditions — Nine-Tenths of 
Failures Preventable — All Great Forces Invisible — Experience the 
Great Teacher — Ignorance a Relative Term — The Pitfalls — Apathy 
— Procrastination — Conceit — The Superficial Viewpoint — Conser- 
vation That Wastes — Aggressive Competition — Worshiping Pre- 
cedents — Responsibility Without Authority— Demanding Results 
Without Providing Equipment — Looking Through the Wrong End 
of the Telescope , 221 



For Paper Box Manufacturers 13 



ADDENDA 

PART ONE 

The Determination and Use of Composite Average Cost Rates, 
by Robert S. Denham — Specimen Estimates Illustrating the Use 
of Composite Averages, by Henry L. Stortz — Depreciation Rates 
Suggested by the Joint Cost Committee — Rules and Regulations 
of the Box Board Manufacturers Association — Uniform Order 
Blank for Box Boards, recommended by The Western Paper Box 
Manufacturers Association — Paper Trade Customs — Uniform Or- 
der Form for Paper, Suggested by The Western Paper Box Mfrs. 
Ass'n— "Safe Short Cuts in Estimating," by W. C. Carlson 237 

PART TWO 

Committee's Note — Gauge Lists— Ream Weight Tables — 
Equalization Tables for Box Boards — Shears' Quick Calculating 
Average Tables for Strawboard — Rules for Finding Count of 
Coated Board— Weight and Cost of Coated Board— Cost of Board 
per 100 Sheets, Nos. 10 to 120, at from $20 to $90 Per Ton— Tables 
Showing Cost of Sheet Lining per Sheet at from 40 Cents to $1.75 
Per Hundred Sheets — Paper Equivalent Tables — The Equivalen- 
tor — Slide Rules — Quick Paper Rules — Strip Paper Table — Table 
Showing Cost Per Hundred Sheets of Paper — Shears' Estimating 
Tables — Proportionate Ream Prices — Cost of Paper Per 1000 
Square Inches — Cost of Paper, 20 x 24 Per Ream, Per 1000 Square 
Inches, and Per Sheet — Cost of Trim Paper Per 1000 Running 
Inches — Cost of Gummed Kraft Per 1000 Running Inches — Stay 
Paper Required Per 1000 Boxes or Lids — Strip Cutting Tables — 
Cost Per 1000 Running Inches Strip Paper — Cost per 1000 Run- 
ning Inches Muslin Strips — Box Twine Table — Table Showing 
Cost Per 1000 Running Inches Metal Edge — Table Showing Cost 
Per 1000 Running Inches Metal Stitch Wire — Glue and Gums — 
Waste and Spoilage 268 



The source of knowledge is experience. 

Experience is of two kinds — our own, and that of 
others. 

Knowledge gained from our own experience is most 
expensive, that gained from others most economical. 

Blazing a new trail is rough work, and slow — the 
beaten pathway is smoother, and swifter, providing it 
leads to the desired destination. 

Life is a great university, from whose curriculum we 
must choose the course which will best fit us to solve the 
problems of our day. 

Study! Reason! Act! 

Stupidity is still the big factor in retarding the prog- 
ress of the human race. 



. CHAPTER ONE 

Introduction 

Objects of This Book — Warning to Reader — Book Not Ex- 
pected to Make Cost Engineer of Reader — Mistakes of Previous 
Students of Costfinding — Formulae Not Dependable as Means of 
Determining Cost — Ratio of Productive to Non-Productive Labor 
Not Gauge of Efficiency — Examples by H. L. Gantt — Cost En- 
gineering Does Not Discredit Accounting in Rs Own Field— Cost 
Engineering Solves the Problem of Costfinding — Has Passed Ex- 
perimental Stage — Duties of Man Developing New Idea — Limit 
of Paper Box Manufacturer's Opportunity for Observation — Dis- 
tinction of Principles and Rules — How to Study this Book. 

The prime object of this book is to help paper box 
manufacturers make a larger and more certain profit on 
their business through greater realization of the value of 
cost knowledge, presenting the means of obtaining such 
information, and explaining how to make use of it. 
Its several purposes may be set forth as follows : 
First. To provide a means by which the paper box 
manufacturer may obtain a clear understanding of the 
various processes of cost accounting advocated and used 
in the past, together with the characteristics of each so 
that he may judge for himself of their merits or weak- 
nesses; thus relieving him of that uncertainty which has 
characterized the subject. 

Second. To present an exposition of the Science of 
Cost Engineering as applied to the production of paper 
boxes so that the manufacturer may realize the advant- 
ages which it offers for his use, and which caused the 
Joint Cost Committee of the Paper Box Manufacturers' 
Associations to advocate the adoption of Cost Engineering 
throughout the industry as the recognized method of de- 
termining cost and in estimating on prospective orders. 

Third. To present a practicable and accurate 
method of estimating the cost of prospective orders of 
stiff paper boxes, of every description and quantity, based 
upon the cost and conditions of production under the av- 
erage of expenses and conditions of individual factories 
where such a system is in use. 



18 Manual of Cost Engineering and Estimating 

Fourth. To show, for comparative purposes, the av- 
erage cost of manufacturing paper boxes, under the com- 
posite expenses and conditions of a considerable number 
of factories where Cost Engineering Systems have been 
in use for periods of one to several years. The latter facts 
also afford such manufacturers as have not installed Cost 
Engineering Systems a basis of estimating for their use 
until such time as they may avail themselves of the op- 
portunity to get the desired information within their own 
factories. 

The author desires to warn the reader that the aver- 
age costs shown are averages only and not to be con- 
sidered as showing the cost in the reader's own factory. 
An average necessarily carries with it the idea that varia- 
tions exist; a part of the items averaged are higher and 
others lower; that without actual and active data on his 
own factory the reader is in danger of selling the product 
below his own costs, or of placing the price too high and 
thereby losing business which might be profitably handled 
if the cost were known. To make this more clear the 
average is accompanied by high and low costs in the 
various plants furnishing data. 

Fifth. To offer to the paper box manufacturers and 
their office employees, in the later chapters of the book, in 
condensed form, some suggestions of advanced business 
methods gleaned from large experience and extended ob- 
servation of the causes of failure among the less success- 
ful concerns. An effort is also made to correct some er- 
roneous impressions and practices that are prevalent in 
the trade because of the limited opportunity of its mem- 
bers for observation and by reason of the lack of facili- 
ties for making a direct study of modern business methods. 
The latter is due to the fact that a large proportion of 
manufacturers have advanced to their present positions 
directly from the workrooms without special business 
training. 

The author does not claim, nor should the reader ex- 
pect, that the reading or study of this book will have the 



For Paper Box Manufacturers 19 

magical effect of making him over into a capable cost 
engineer. 

In fact he rather warns the reader against the too 
ready assumption that the information contained herein 
will unassisted enable him to work out his problems of 
Costfinding. 

Bookstores are prolific with treatises upon various 
subjects labeled in this wise: "How to become a Civil En- 
gineer," "Every Man His Own Lawyer," etc., yet no man 
ever became a proficient civil engineer or attorney from 
the study of these books. This fact by no means indi- 
cates that the books do not have the effect of broadening 
the information of the reader, to an extent which made 
their reading profitable, far beyond the price paid for the 
book. 

There are, and have been for many years, thousands 
of successful civil engineers and able attorneys. Those 
professions have been long established, and many schools 
exist which develop high degrees of proficiency in their 
students, enabling them to successfully solve the problems 
which are presented in their experience. 

Not so, however, in the field of production costs. Mil- 
lions of dollars and, in the aggregate, thousands of years 
have been spent in endeavoring to find the cost of manu- 
facturing the items of commerce. 

Unfortunately, those who made the earlier efforts in 
the direction of determining the cost of production seem 
neither to have realized the magnitude of the undertaking, 
nor the importance of the results to those most vitally 
interested. 

Their chief errors, as proved by long and costly ex- 
perience, were due to the erroneous assumption that 
formulae could be created which would serve in all cases 
as an easy guide to the cost, and for a ready comparison 
of the relative conditions of the factory in different 
periods of operation. 

The first error was in the assumption that there could 
be established a formula of Material, direct Labor, and 



20 Manual of Cost Engineering and Estimating 

Expense, which could be relied upon to show the cost of 
varied items of product. 

The second error of importance was the assumption 
that the relation of certain expenses to each other could 
be depended upon as a reliable guide to the relative ef- 
ficiency of the factory organization. 

Of the first, much will be said in this book be- 
cause it deals directly with the chief subject under dis- 
cussion. Concerning the second, it will be sufficient to 
quote part of an address by Mr. H. L. Gantt, the noted in- 
dustrial engineer, before the American Society of 
Mechanical Engineers (New York), in which he shows 
several examples of the readiness with which intelligent 
people will seize upon theories and formulae which will 
not bear analysis. Mr. Gantt says : 

"With the growth of competition within the last 20 years the 
necessity for some knowledge of costs became evident, and the 
manufacturer turned to the accountant for a system of finding 
costs. The present system of railroad accounting had been de- 
veloped, and certain ratios accepted as measures of efficiency of 
operation; notably among them the ratio of operating expense 
to total income. Being accustomed to having the managerial ef- 
ficiency of railroads expressed by a simple ratio, the financier 
demanded a similar simple measure of the efficiency for an in- 
dustrial plant. The cost accountant promptly gave him what he 
called the ratio of "non-productive" to "productive" labor, which 
he said should be low for good management. By "non-produc- 
tive" labor he meant salaries of all kinds, and all other labor that 
could not be charged directly to an order, including miscellaneous 
labor, such as watchmen, sweepers, truckmen, etc. By "produc- 
tive" labor was meant simply that labor which could be charged 
directly to an order. 

"While the ratio of operating expenses to total income may be 
a fair measure of efficiency in a transportation company, the 
ratio of "non-productive" to "productive" labor is not only not a 
fair measure of the efficiency of operation in a manufacturing 
plant, but is often exactly the reverse. To my mind the wide- 
spread use of this ratio as a measure of efficiency has been more 
effective in producing inefficiency than any other single factor 
except the oft-repeated statement that you must have low wages 
if you would have low costs. Until these two fallacies are abso- 



For Paper Box Manufacturers 21 

lutely discredited, we cannot expect a solution of our most serious 
problems. 

"Of these two fallacies, the second, namely, that you cannot 
have high wages and low costs, seems to be yielding gradually to 
the overwhelming mass of evidence against it. So many cases are 
now on record where the industrial engineer has increased out- 
put, raised wages, and at the same time lowered costs, that only 
those who are too conservative to investigate are still holding on 
to the old theory. Better still, many employers have shown the 
courage of their convictions by adopting a scheme of management 
for the increase of output and the reduction of costs, which they 
are perfectly well aware will make a decided increase in wages. 
With evidence of this kind at hand, it is safe to say that this 
fallacy will before long be entirely discredited. On the other 
hand, it must be fully understood that something more than a 
simple increase in wages is necessary to increase output, and if 
nothing is done but to increase wages we are sure to get higher 
costs. The other fallacy, that the ratio of "non-productive" to 
"productive" labor is a gage of efficiency, is so firmly rooted, how- 
ever, that it is hardly to be expected that it will yield in the near 
future. 

"In considering this subject I wish to call attention first to 
the terms "productive" and "non-productive" labor, which seems 
to me to be misleading. If any expense is "non-productive," 
namely, does not contribute to the end for which the factory was 
established, it should be eliminated. The salaries of the officers, 
foremen, janitors, truckmen and laborers, as well as the money 
paid for taxes, insurance or interest are necessary to the opera- 
tion of the factory and therefore productive. They are, however, 
not chargeable usually to any specific order, but must be distri- 
buted over all the work done according to some definite rule. I 
prefer to call all such expenses that have to be distributed "in- 
direct" expenses, and those that are chargeable to specific orders 
"direct" expenses. The ratio which we have in mind is thus 
more correctly described as that of "indirect" to "direct" labor, 
his, however, is a matter of names and does not affect the fact 
that to base any conclusions as to the efficiency with which fac- 
tory is run on this ratio is misleading, and to attempt to use it 
as the gage in operating a factory may be, and often is, productive 
of inefficiency rather than efficiency. 

"This fact can best be made clear by a series of examples. 
In a factory where this ratio was used as a guide the following 
incident occurred: 

"A foreman had ten men on a job, which he said could be 
done by eight if he could have a boy to supply them with work. 



22 Manual of Cost Engineering and Estimating 

He said, however, that if he made the change, the boy's wages 
would be called "non-productive" labor and his ratio would go 
up, with the result that he would be criticized, so he did not 
make it. 

"In the U. S. Navy an energetic officer studied the loading of 
ammunition and very much reduced the direct labor employed, 
but, being unable to reduce the indirect labor in the same propor- 
tion, the above ratio went up. He came in for very severe 
criticism, notwithstanding the fact that his total labor had been 
decidedly reduced. 

"I might give numerous examples of this kind, including one 
where two men took the place of sixteen, and a daily direct wage 
of $8 took the place of $48, with but little increase of the corre- 
sponding indirect expense. The result of this and other changes 
was that the ratio for that shop became over double its former 
value, with a marked reduction in the total cost. Needless to 
say, that the ratio theory in that plant is not regarded with the 
same reverence that it once was. 

"Inasmuch, however, as the efficiency of the operation of a 
factory is made up of the efficiency of a great many independent 
operations, and is really indicated by the cost of the various 
articles produced, there has not yet been found any easy way of 
indicating the efficiency without first getting the cost of the 
individual article. Hence there is no readily available idol that 
can be substituted for the discredited one. Having been accus- 
tomed to an idol, however, both the accountant and the financier 
demand one, and are loath to give up the idol they have so long 
worshipped, no matter how badly shattered it may be. When, 
however, a reliable cost system has been installed, this idol be- 
comes so badly discredited that even its most devoted high priests 
are obliged to abandon it." 

It is not the intention of the author to discredit Jhe 
work of the accounting profession in its own field. He 
believes, however, and the company of those who concur 
in this belief is steadily growing, that rapid advance in 
the methods of manufacture has developed a condition 
which necessitates the separation of the work of cost de- 
termination from the domain of accounting, and demands 
a new branch of engineering which shall cover that par- 
ticular field. The task is preeminently that of the en- 
gineer. 

Cost Engineering, around the fundamental principles 



For Paper Box Manufacturers 23 

of which this book has been written, presents the solution 
of the problems which have baffled the accounting profes- 
sion. Cost Engineering has passed the experimental 
stage, has been developed in over forty different lines of 
manufacture, and at this writing is in use in over six hun- 
dred factories. The Science of Cost Engineering is un- 
questionably destined to become the universal costfinding 
method. 

It is time the American manufacturer realized that 
the determination of the cost of production is a serious 
problem, affecting the vital element of business — profits, 
and that he should study it as assiduously as the technique 
of his craft, that he may not only be an artisan but a suc- 
cessful business man as well. 

Cost Engineering is a comparatively new science and 
the author is aware that it must pass through experiences 
similar to those which have accompanied the introduction 
of every new philosophy. Many people, bound by habits of 
thought and the traditions of their craft, are prone to 
ridicule innovations. Others, mistaking form for essence, 
can see no merit in it because it does not conform to pre- 
conceived theories of their own. Still others, grasping 
fragments of truth, will be anxious to pose as fully in- 
formed, and again unwittingly present new proof of the 
truth of Pope's immortal line, "A little learning is a 
dangerous thing." 

The man who conceives and develops a new idea, like 
the creator of a new invention, finds himself facing a 
double duty to the public. He must not only devote his 
mental energies to the development of his idea, to the 
highest degree of efficiency within his power, but recog- 
nizing that its value lies solely in its use, he must pa- 
tiently and persistently persuade others that it is worthy 
of their adoption and support. 

He must oppose ignorance, mental apathy, habits of 
thought and the opposition and misrepresentations of 
those interested in similar but inferior projects. But the 



24 Manual of Cost Engineering and Estimating 

man with a real message for men will not fear criticism 
or skepticism. Those who have contributed most to the 
world's advancement have been the most conspicuous tar- 
gets for the tirades of the ignorant and unbelieving. Truth 
will prevail in the end. The greatest error possible, to the 
man who knows, is the act of giving up his work in fear of 
criticism. Great minds find it profitable to seek knowl- 
edge from humble sources. It is Only little minds that 
scoff at earnest effort, criticising the worker. Even a 
wobbly-legged pup can bark at the heels of a Lincoln. 

The author recognizes that there are many brilliant 
and capable minds in the paper box industry. Most of 
them, however, have been limited in their opportunities 
for observation and for comparative study because their 
effort has been necessarily within the precincts of rela- 
tively few business concerns. He therefore hopes that all 
will find within these pages either new ideas or new view- 
points of old ideas which will make their reading profit- 
able. 

Keep in mind the thought that mere opinions are 
worth little, that no opinion concerning a problem should 
be accepted while resort may be had to fundamental prin- 
ciples as a means of proof. 

The reader should differentiate between principles 
and rules. Principles are fundamental truths, eternal 
and unchangeable. Rules are man-made and subject to 
change. 

Men may express principles by formula to create a 
working hypothesis. But if a single fact of experience 
develops proof contrary to the formula, the hypothesis 
fails and must be corrected or abandoned. 

There can be no exceptions to principles. Rules, on 
the contrary, are created as temporary tools. They serve 
their purpose and are changed or discarded with the 
progress of knowledge. Exceptions to rules may be fre- 
quent without destroying them. 



For Paper Box Manufacturers 25 

Study this book with a broad mind, not with intent to 
judge its merit by standards of your past experience, but 
rather to *get the viewpoint of the author so that his work 
may be judged in relation to provable facts. 



The greatest present need is an antidote for 
the unwillingness of men to profit by the 
previous experience of others. It would be 
amusing, were it not so expensive, to watch 
the gropings of many corporation officers 
for methods to test efficiency. Ignorant of 
fundamental principles, intolerant of out- 
side suggestion, unable to detect the an- 
alogy in other undertakings, they repeat 
the expensive experiments of the past. — 
Charles DeLano Hine. 



CHAPTER TWO 
What is Cost? 

Definition of Cost — Definiteness of Expense Factors — Pur- 
pose of Cost System — When Cost has Been Determined — Factory 
Compared to Department Store — The "Fair Deal" as the Basis of 
Business — Hurley on Unfair Competition — Common Misconcep- 
tions of Cost System — What does Not Constitute a Cost System — 
Omission of Expenses by Majority of Manufacturers — Material 
Items in Manufacture of Paper Boxes— Expenses of Selling, Mak- 
ing and Delivering — How Expenses Must be Charged — True Cost 
Source of Profit, also Satisfaction to Both Manufacturer and 
Patron — Clerical Work Required by Cost System — Degree of 
Accuracy Desirable — Practicability a Prime Factor — Success of 
Installation Dependent upon Skill of Engineer — Cause of Present 
Deplorable Conditions of Competition. 

The cost of an item of product is the sum of all ex- 
penses incurred in its production. Nothing can be more 
fundamental than the truth contained in the foregoing 
statement. 

Every expense item is definite. It must be definite 
in amount or it could not be recorded. It must be definite^ 
in purpose or it would not be authorized. 

It follows that if every expenditure is definite, and 
cost is the sum of certain definite expense factors, cost 
must be a definite amount. The term "sum" implies 
definiteness. 

The purpose of a cost system is to determine what 
is that definite amount which represents the total, or sum, 
of expenditures. It follows also that since the cost of 
each item of product is a definite amount, two systems 
that arrive at different results cannot both be right. One 
may be right, another wrong, or both may be wrong, but 
it is impossible that both can be right. 

To this statement some will say, "That depends on 
how you figure it." To these we must answer, "Cost is a 
fact. When an article has been completed, no opinion, 
or method of figuring, can change the amount of its cost. 
Opinions can have no influence upon facts." Cost sys- 
tems have as their prime object to determine the exact 



28 Manual of Cost Engineering and Estimating 

sum of the elemental expenses involved in producing the 
item under consideration. 

We get clearer thoughts and ideas if we agree upon 
definitions of terms. Let us then establish this basis of 
understanding: Expenses are the elements of cost. Cost 
is the exact sum of the elements or expenses incurred on 
account of the item under consideration, up to the time, or 
point, at which cost is determined. Cost has not been 
determined unless every cent of expense has been in- 
cluded, nor if the result includes a cent of expense right- 
fully chargeable to some other item. 

One of the most practical methods of getting the 
proper viewpoint is to consider the factory divisions as 
departments in a department store. 

The factory order is made up of widely varying 
amounts of material and time items, each of which has 
its individual cost per unit, just as the store customer's 
orders vary in items and prices. 

The merchant who would furnish goods to one cus- 
tomer, charging part of the cost to another, would soon 
find himself in serious trouble with his patrons. But such 
action would be identical in principle with that of the 
manufacturer who charges one part of his product with 
expenses properly chargeable to another, passing the 
charges on to the customers. 

The fact that the manufacturer's customer could not 
so readily check up the items has generally made the of- 
fender immune from the customers' ire, but recently the 
consumers have begun demanding fair play from the 
manufacturer. Keener competition and more intelligent 
buying have made better methods of costfinding impera- 
tive. 

The "fair deal" is coming to be more and more the 
basis of business. In his recent book, "The Awakening of 
Business," Edward N. Hurley, Chairman of the Federal 
Trade Commission, says : "Every article produced should 
bear its equitable share of all expenses, including over- 
head and selling expenses. There are manufacturers 



For Paper Box Manufacturers 29 

whose line consists of, say, six articles; on three they are 
making a profit and on three they are losing money, but 
claim that these three articles help to take care of the 
overhead expense. This method of doing business is 
most detrimental to healthy business conditions. Fre- 
quently one of these articles may be the sole product of 
an individual who is striving and struggling to exist 
against a firm which is placing the same article on the 
market as a means to help take care of its overhead ex- 
pense. Surely this is not wholesome competition. An 
adequate cost system would reveal this unhealthy con- 
dition and make a remedy possible." 

The cause of most of the unfair competition is un- 
questionably the prevalence of erroneous ideas as to what 
constitutes the cost. A hundred men chosen by lot from 
the paper box industry might be called upon to furnish 
in writing a statement of what they would consider the 
proper elements of expense, and the proper methods of 
charging them to the product, and no two would agree 
either in the items or methods of application. When such 
a condition exists, and it unquestionably does exist at this 
writing, it is high time that someone with experience 
undertook to unify the methods of calculation for the 
craft. 

It would be impossible as well as tiresome to enumer- 
ate the peculiar conceptions of cost and of costfinding 
methods which prevail among manufacturers, many of 
whom have been engaged in business for several decades. 
The following examples will serve to illustrate some of 
the more common errors : 

(a) "I figure the cost of materials, and add the wages 
of the workmen for the time they spend on the order, that 
gives me the actual cost. Then I add one hundred per 
cent for overhead and profit." 

It is difficult to understand how any man with reason- 
able intelligence can offer such a formula seriously. Ma- 
terials and wages do not in any sense represent "actual 
cost." They comprise but two important items in a long 



30 Manual of Cost Engineering and Estimating 

list of expenses, none of which have any relation to the 
amount of materials or wages involved in the production 
of the product. At best this plan can be considered an 
estimating or price-making system of very doubtful value. 
The addition of a single percentage to cover both a part of 
the expenses and the profit serves to conceal rather than 
to show the cost. This is sometimes done in a purely 
merchandising business, but under certain conditions 
only, as will be explained in the chapter on "Figuring 
Percentages and Profits." 

(b) "1 used to figure a percentage of overhead on ma- 
terial but found that it was wrong. Now I put my over- 
head on the direct wages only, and add the cost of the 
material to the total, then add another percentage for 
profit" 

This manufacturer discovered that operating ex- 
penses did not increase with increased cost of materials, 
nor decrease when cheaper material was used, so he aban- 
doned the percentage of overhead on materials. Had he 
taken a second thought he would have discovered also 
that the operating expenses were equally independent of 
the wage element. Had he gone far enough in pursuit of 
the truth he would have proven to himself that every ex- 
pense is definite in amount, object and benefit; and that in 
the entire category there is no instance where two ex- 
penses having different objects can be depended upon as 
being chargeable in the same proportion. It follows 
therefore that there is no single expense or group of ex- 
penses which can logically be used as a basis for the ap- 
plication or distribution of another expense or group of 
expenses. 

(c) "7 am using a cost system which I established 
about ten years ago. I kept track of my expenses for one 
hundred days and averaged them to get my daily expense. 
I add this to my payroll to get my cost." 

This is one of the examples that proves how little 
some manufacturers use their mentality. There was 
nothing in this case to show that this manufacturer really 



For Paper Box Manufacturers 31 

had ever made use of this "system," nor could he ex- 
plain clearly the process by which he applied his aver- 
age daily expense to his payroll. The author concluded 
that this story was a "habit" which had served him to 
"get by" so often in the past that he had developed nerve 
enough to try it even on a cost engineer. 

Such a plan, even though the records were recent, 
instead of ten years old, is ridiculous. It is amusing, were 
it not so serious, to consider the curiosities which men, 
who otherwise seem sane and capable, bring out for ex- 
hibition as "cost systems." 

No scheme of figures can be entitled to recognition as 
a cost system unless it actually does, with a reasonable de- 
gree of accuracy, determine the amount of the various ex- 
penses involved in the production of a given item of 
product. 

It is absolutely certain that no plan which bunches 
together a mass of expenses for simultaneous distribution, 
such as is common in overhead or general expense ac- 
counts, can be relied upon as a cost system. Such plans 
destroy the identity of expenses and the records of the 
purpose of each; both must be known if intelligent dis- 
tribution is to be accomplished. 

In casting up their expense items for the purpose of 
creating bases of calculation, few manufacturers include 
more than half of the items in number, and seldom more 
than 85 per cent in amount. The larger proportion in 
amount is due to the consideration first of the more im- 
portant items, such as labor, rent, selling expense, etc. 

The following lists are fairly complete, although each 
individual factory will have some items peculiar to itself : 



32 Manual of Cost Engineering and Estimating 



LIST OF ITEMS OF MATERIALS USED IN MANUFACTURE OF 
STIFF PAPER BOXES 

Bottoms Packing Paper 

Box Covers Padding 

Cases Paste 

Cloth Printing 

Edges Pulls 

Flies Ribbon 

Flowers Seals 

Glue Setting-up Material 

Hinges Stay Paper 

Labels Tapes 

Lace Paper Tops 

Lid Covers Trim 

Lining Twine 

Metal Edges Wire for Stitchers 

Neck Covers Wood 



For Paper Box Manufacturers 



33 



EXPENSES OF SELLING, MAKING AND DELIVERING 
STIFF PAPER ROXES 



Advertising 

Advertising Postage 

Automobile Expense 

Rad Accounts 

Belting 

Relt Lacing 

Rookkeeping 

Costkeeping 

Clerical Help 

Depreciation on Ruilding 

Depreciation on Equipment 

Depreciation on Merchandise 

Discounts to Customers 

Deductions for Errors, etc. 

Donations 

Dues, Rusiness Organizations 

Drivers' Wages 

Electric Current for Lighting 

Electric Current for Power 

Errand Roys 

Express Charges 

Foreladies' Wages 

Foremen's Wages 

Freight 

Fuel 

Gas for Lights 

Gas for Heat 

Helpers' Wages 

Inventory Clerk 

Insurance on Ruildings 

Insurance on Equipment 

Insurance on Raw Stock 

Insurance on Work in Process 

Insurance on Finished Stock 

Insurance, Liability 

Insurance, Roiler 

Interest on Real Estate Invest- 
ment. 

Interest on Ruilding Investment 

Interest on Equipment Invest- 
ment 

Interest on Raw Stock 



Interest on Work in Process 
Interest on Finished Stocks 
Interest on Accounts Receivable 
Lubricating Oil 
Manager's Salary 
Other Officers' Salaries 
Officers' Traveling Expenses 
Postage — Commercial 
Porters' Wages 
Rent 

Repairs to Ruilding 
Repairs to Equipment 
Salesmen's Salaries 
Salesmen's Commissions 
Salesmen's Traveling Expenses 
Signs 
Soap 

Spoiled Work 
Superintendent's Salary 
Stenographers 
Stockkeeper's Wages 
Storage 

Supplies for Factory Operations 
Supplies for Factory Office 
Supplies for Commercial Office 
Supplies for Sales Office 
Telephones, City 
Telephones, Interior 
Telephones, Long Distance Mes- 
sages 
Telegrams 
Taxes, Income 
Taxes, Corporation 
Taxes, Realty 
Taxes, Personal Property 
Towels 
Waste, Cotton 
Waste Paper Raling 
Watchman 

Watchman's Clock Supplies 
Water Rent 
Workmen's Wages 



34 Manual of Cost Engineering and Estimating 

Every order for paper boxes requires more or less of 
the items of materials enumerated in the first list. A 
simple box will require a few only, while a fancy box 
may require nearly all of the items. 

The expenses due to commercial and factory activi- 
ties, however, are so interwoven between the various 
kinds of effort that practically every one of the items 
enters to a greater or less degree into every order. 

All items of expense must be charged in such a man- 
ner that every customer shall pay his just proportion of 
each, no more and no less. 

It is not surprising that in the absence of any definite 
method of analyzing processes and expenses the esti- 
mates of cost should differ so greatly. Manufacturers 
who realize the difficulty of arriving at true cost, often put 
on large percentages to cover overhead, in the belief that it 
pays to "get on enough." The fact is that this plan is 
almost as bad as making the price too low. When the 
price is too high it not only drives away business but 
creates the impression that the successful competitor, who 
provides good product at a lower price, is a more efficient 
and economical producer. 

A knowledge of true cost, determined through a prac- 
tical system, not only proves a source of satisfaction and 
profit to the manufacturer using it, but serves as a means 
of creating confidence in him on the part of the customer 
that his prices are fair. 

In considering the advisability of installing a prac- 
tical cost system, one of the first thoughts on the part of 
the manufacturer is that the amount of clerical work 
must be greatly increased. 

If the system is properly planned the amount of cleri- 
cal effort should be no greater than with the plan in com- 
mon use wherein the amount of direct wages at time 
rates, is compiled as a basis for applying the overhead. 

The question next arises as to the degree of accuracy 
which should be demanded. Laxity is dangerous in that 



For Paper Box Manufacturers 35 

it tends to create loss of profits in one direction, and the 
loss of business in the other. Exactness also may be car- 
ried to a point where expense of clerical effort and de- 
mands upon the human factor make it impractical. 

Practicability becomes the prime factor, therefore, in 
the choice of a cost system. Practicability will not admit 
of inaccuracies great enough to cause loss of profits, 
neither will it permit such minutiae of detail as consume 
the profits or tax the mental energy in elaborate calcula- 
tions. 

Planning a system which will require the minimum 
of entries and special skill in operation, without deviating 
from true accuracy enough to affect the selling price, is 
the ideal which should be attained. If the variation from 
true cost does not affect the selling price, it is obvious that 
it cannot affect the profits. 

The success of the system depends, therefore, to a 
very great extent upon the skill of the individual who 
plans it and teaches its operation. He must know how 
to concentrate on essentials, and how to eliminate non- 
essentials. The novice in the science of Cost Engineering 
is not more likely to succeed than the novice in the 
science of chemistry. 

Cost Engineering is in its infancy, compared to 
chemistry, yet the average man seems quite sure that he 
could design and install an accurate cost system at the 
first attempt. Because his effort is not immediately fol- 
lowed by the "explosion" of bankruptcy, he assumes that 
he has succeeded where thousands of men before him 
have failed. He does not realize that a concern can lose 
ten per cent of its capital every year and yet stay in 
business for fifteen years, which is a longer period than 
the life of the average business. 

The absence of logical and definite methods in the 
past is responsible for the deplorable condition in which 
the producing industries find themselves as they are grad- 
ually aroused to economic consciousness. Even the ac- 
counting profession has failed to grasp the fact that 



36 Manual of Cost Engineering and Estimating 

mechanical progress in production methods has outdis- 
tanced its traditional fallacies of "material, direct labor 
and overhead" as certainly as the motor car has outdis- 
tanced the ox cart. Moreover, the ox cart did eventually 
reach its destination, while the cost accounting formula 
cannot possibly succeed under conditions common in fac- 
tories today. 

In the final analysis we find that the cost of an item 
of product is the sum of the elemental expenses involved 
in its production; the cost of an item either in the ware- 
house, or sold, is the sum of the expense elements incurred 
for its benefit in production, handling and marketing, up 
to the time at which cost is determined. 



CHAPTER THREE 
Advantages of Knowing Cost of Production 

The Buyer's Query — Universal Desire for Reward — Ways of 
Increasing Profits — Delusion of Wages as Cost Basis Responsible 
for Serious Losses — Dangers of Percentage Greater in Complex 
than in Simple Factories — Causes of Unfair Competition — Small 
Orders Though Desirable Need Careful Attention to Prevent Loss 
— Financing the Experiments of Others — Cost Records as Founda- 
tion for Estimating — Analysis of Expenses Provided in Cost Sum- 
mary — Comparison of Records to Determine Causes of Fluctua- 
tions in Cost — Comparison of Expenses with Charges — User of 
Rule-of-Thumb Outdistanced by Man Who Knows — Profitableness 
of Intelligently Directed Effort — Meeting the "Shrewd" Buyer — 
Money Necessary But Not Object of Life — Happiness the Great 
"Desire" — Summary of Advantages. 

The normal thought in the mind of the person who 
is asked to buy something is, "What is there in it for me?" 
This is doubly true of the man who is not only asked to 
buy service, but also to study a new science so assiduous- 
ly that he will change his habits of thought in connection 
with the everyday routine of his business. 

All human activities, whether business or philan- 
thropic, have as their object a "reward." The reward of 
business is Profit. The philanthropist takes his reward 
in mental satisfaction with himself for having helped 
others along life's rugged way. This chapter has to do 
primarily with the object of business — Profits. 

Profits generally are reckoned in terms of finance, at 
least the world judges of a man's success by his ability to 
increase the amount of his net assets through profitable 
business transactions. There is, however, an important 
element of personal profit in self respect if the transac- 
tions which yield the increased assets are untainted by un- 
fairness either to one's customers or competitors. 

As a means of conducting a financially profitable 
business the Cost Engineering system offers large possi- 
bilities. 

The manufacturer is accustomed to assuming that 
there are only two ways of increasing his profits — higher 



38 Manual of Cost Engineering and Estimating 

prices and larger volume. The fact is that these are the 
more difficult methods by which the result is accom- 
plished. They present themselves first because of the 
theory that a big business offers opportunity for profits in 
proportion to volume, and the obvious fact that the cost of 
an item being the same a higher price will yield a larger 
profit. 

Under a careful analysis it is usually found that the 
expense of driving for more volume, and the usual lower- 
ing of prices to this end, destroys the profit on the new 
business. If the price is lowered to get the customer 
started he will expect the price to be correspondingly low 
on future orders. This makes it difficult to get the new 
business on a permanent and profitable basis. 

A raise in prices is likely to curtail the business to a 
certain extent, especially if there is a uniform raise, be- 
cause under the ordinary conditions some items of product 
are already rated too high, and others too low. Those 
which are too low will stand the raise, but those which are 
too high will not. 

The old idea of assuming that cost is related to direct 
wages frequently leads the manufacturer to believe that 
the most profitable items are unprofitable, and vice versa. 
Several instances have come directly under the observa- 
tion of the author where the manufacturer was consider- 
ing the discontinuance of the most profitable part of the 
business under the impression that it was unprofitable. 

This is likely to be the case in a combination stiff and 
folding box factory. Many stiff box factories have very 
little machine equipment, especially if the boxes are of a 
fancy grade involving a large use of partitions, trays and 
trimming. If this type of factory is operated in connec- 
tion with a folding box factory where the product is made 
largely with printing presses, cutters and creasers and 
automatic gluers, all rapid machine processes, the over- 
head will mainly be placed on the hand work, although 
the investment, power and supply elements are much 
greater in the folding box divisions than in those of the 



For Paper Box Manufacturers 39 

stiff box. The result is that folding boxes seem to be 
produced much more cheaply than is actually the case and 
are apparently much more profitable. Under these con- 
ditions the folding box division becomes an unfair com- 
petitor of the exclusive folding box manufacturer, al- 
though its owner is thoroughly conscientious and believes 
he is fair. 

The majority of cases of unfair competition can be 
traced to just such causes. The only remedy is the gen- 
eral introduction of scientific Cost Engineering methods. 

With a system which makes it possible to know posi- 
tively what it costs to produce each of the hundreds or 
thousands of orders which pass through a factory in a 
year, and to know the hourly cost and output of the proc- 
esses, it is possible in a comparatively short time to deter- 
mine the losing orders. The live manufacturer will then 
tactfully convince the customer of the necessity for rais- 
ing the price. But it will not be necessary to change the 
price on the profitable business. This can be retained at 
previous prices, and more business of the same kind de- 
veloped. 

Small orders are frequently the most prolific sources 
of trouble and loss, yet the small order should not be 
looked upon as undesirable. With correct analytical 
costs it is easy to determine what is a fair price for any 
given piece of work and to demand it. Experience proves 
that the production possible with a crew of operators in 
a day on small orders is but a fraction of what the same 
crew can produce if the runs are long and uniform. It 
is impossible, with wages as a basis, to determine fair 
prices for this work. 

The customer who needs a few boxes has no right to 
demand that the box manufacturer not only provide him 
with the boxes which he needs, but present him as well 
with a part of what is truly a part of their cost. 

The buyer experimenting with a new commodity, and 
who does not wish to risk a large investment in boxes, 
should not expect the box manufacturer to help in financ- 



40 Manual of Cost Engineering and Estimating 

ing his scheme and to protect him against the possibility 
of loss by furnishing him with a few boxes at the quantity 
price. If his scheme has not sufficient merit to warrant 
his assuming all of the burden of risk, it is probably not 
worth developing. He should be satisfied that the box 
manufacturer is willing to take on the small order at any 
price. 

The records compiled in connection with a practical 
cost system serve as a foundation for practical estimating, 
while the records of production following the securing of 
the order on which an estimate was made, serve as an 
absolute check on its accuracy. The continuous alternat- 
ing of estimate and cost, estimate and cost, again and 
again, provides for the wide-awake estimator the most 
excellent training and checking. Such experience is 
bound to develop a skill in estimating which will elimi- 
nate a large percentage of the leaks due to that phase of 
the business. 

The analysis of expenses afforded by the periodical 
cost summary proves a valuable means of making com- 
parisons from month to month so that waste in expendi- 
tures may be eliminated. From this tabulated statement 
the manufacturer not only learns the cost of the various 
processes, but can compare the elemental expenses, item 
for item with previous like periods, to determine the 
causes of cost fluctuations. 

The same analysis shows the conditions of activity or 
inactivity in the various processing divisions of the fac- 
tory. The comparison of productiveness with expenses 
shows in dollars not only the elemental and total expenses 
of each processing division but, for the like purpose of 
comparison, the amount charged against factory orders 
for the same period. 

With this information in hand the manufacturer is 
in a position to meet the necessities of abnormal condi- 
tions as they arise. 

Prosperous times alternate with "hard times" as cer- 
tainly as day with night. The well-informed manufac- 



For Paper Box Manufacturers 41 

turer is in a position to note the trend of conditions and, 
figuratively, trim his sails to meet the industrial storm in 
time to save himself from large losses. He has the means 
at hand to show him how to readjust his prices to the un- 
usual conditions so that his business may be profitable 
even through times that are generally the reverse of pros- 
perous. 

The manufacturer who follows the "rule-of-thumb" 
methods of conducting his business, or places his confi- 
dence in a system which assumes that a part of his ex- 
penses can be used as a basis for the application of other 
expenses, is certain to be misled in periods of depression 
or readjustment. He may succeed in the prosperous time 
by being carried along on the wave of a strong demand. 
But he is bound to be outdistanced in the long run by the 
man who has the details of his business in such shape that 
he is informed of every serious condition in ample time 
to make due preparation to meet it. 

Intelligently directed effort can always be relied upon 
to yield a larger return both financially and mentally than 
any hit or miss effort. 

From the purely financial standpoint there are many 
other advantages to be had from knowing the cost of the 
product. Not the least of these benefits is the ability to 
deal with that type of shrewd buyer who assumes to know 
all about the paper box business. He can, to his own 
satisfaction at least, figure the cost of the boxes he wishes 
better than you yourself. 

He is smooth-tongued. Unless you are careful he will 
convince you that he has had a large experience and that 
after all you are only a novice in the business. He talks 
glibly of direct labor and the application of overhead 
expenses, minimizing the larger items of expense and 
omitting a considerable portion of the lesser, then tries to 
show you that since you have to maintain your plant and 
pay your rent anyhow, the only extra expense you will 
have on his account will be the material and labor. There- 
fore you can afford to take his order at a very low price. 



42 Manual of Cost Engineering and Estimating 

The added advantages of a larger volume will be all yours 
(and the gain all his). 

In addition to that cost knowledge which is funda- 
mental in a manufacturing business, you will be able to 
put into operation, if you care to do so, a system of stand- 
ards and records which will have the effect of greatly 
increasing the efficiency of your workmen. 

The possibilities that unfold before the paper box 
manufacturer in the contemplation of his subject are 
enormous and far-reaching in the opportunities for de- 
velopment, both for increased production at a smaller ex- 
penditure of energy and for larger financial profit. 

After all we live in our emotions or feelings. Money 
is only a means to an end. It is very necessary in the 
scheme of life, but getting money must not be the only 
object. Too many of us live as though money was the 
one and only desirable objective. 

Our happiness, and that of those we love, consti- 
tutes the Great Desire. If money will help in the at- 
tainment of that end it is desirable. But a clear con- 
science and a sense of fair dealing with our fellows are 
equally important. 

The thief may get money but he cannot be said to 
enjoy it. He simply mistakes the means for the end and 
after committing crime, lives a life of fear and shame. 
The man who takes unfair advantage of his customers in 
business transactions may get money quickly, and still be 
within the law, but he cannot enjoy the same peace of 
mind, or satisfaction in life, that is the lot of the man 
who deals fairly. 

In the beginning of this chapter the author stated that 
"all human activities have as their object a 'reward.' " 
Profit is the reward of business. Happiness is the reward 
of dealing fairly and justly with our fellows. 

The advantages of knowing the cost of production 
may be summed up as follows : 

The certainty of a better living for yourself and 



For Paper Box Manufacturers 43 

family than could be expected under conditions where 
part of your product is sold at a loss. 

A larger measure of respect from your customers. 
No matter how much people may like a bargain in price 
when they are buying, they respect the successful business 
man and prefer to deal with him rather than with his less 
successful competitor. 

Greater confidence on the part of your bank. The 
business of the successful man is solicited by the banker. 
The man who operates his business in an uncertain man- 
ner must beg for banking favors, if he gets them at all. 

Greater admiration and larger cooperation on the 
part of your associates. Financial success attracts desir- 
able people to a business. Fair dealing cements their 
friendship so that the successful and fair dealing manager 
can have the unquestioning cooperation of his associates 
in any undertaking by merely indicating his desire. 

Unlimited credit. Credit is not determined so much 
by the financial statement rendered as by the character of 
the individual who controls the policies of the business. 
The man with a record of knowing his business so well 
that he makes a fair margin on every sale, and takes his 
discounts regularly, can be trusted not to overbuy. A 
jobber will give him unlimited credit though he will 
cautiously watch the larger concern which conducts its 
business in a less certain manner. 

Best of all you will be able to command in a larger 
measure your own self respect. The man who sees the 
years go by without reasonable gain; who must answer 
every vital question in his business with "I don't know," 
or realize that in trying to fool others into the belief that 
he does know is fooling only himself; such a man cer- 
tainly can neither respect himself highly nor command 
the respect of others. 



"The ability to succeed is inherent in every 
man. It differs only in degree. There is 
opportunity for every man to give the best 
that is in him. Perseverance is the key- 
note of success. The man lacking it or 
permitting it to lie dormant can never hope 
to rise above mediocrity." — Theodore P. 
Shonts. 



CHAPTER FOUR 

Necessity for Advanced Methods 

When Accuracy Was Unimportant — Origin of Cost Account- 
ing — Demand for Definite Figures — The Makeshift Percentage 
Formulae — The Change from Simple to Complex Methods of 
Manufacture — Changes in Cost Accounting Formulae — Introduc- 
tion of Labor Saving Machine Tools- — Effect on Costs — Failure of 
Percentage Formulae to Meet the New Conditions — The Demand 
for Individuality in Product Cause of Great Diversity — Rapid 
Development of Machines Creates Grave Problems — The Three 
Essentials of Modern Cost Systems. 

There was a time in the history of American indus- 
tries when exact information about cost of production was 
of very little importance. That day has long since passed 
and will never return. 

In the early days, there were no machine tools, no 
railroads, no traveling salesmen, and practically no com- 
petition. The manufacturer, if such the neighborhood 
cooper, blacksmith, cobbler, or weaver might be called, 
had but to provide the shelter, the benches, and the ma- 
terials, to start a factory. 

Then the workmen usually owned the inexpensive 
tools of their trade. Human nature was the same then 
as now. Some workmen took pride in keeping their tools 
sharp and in good order, while others did not. A careful 
workman did not like the careless one to have the right to 
exchange tools at will. 

As there were no railways or steamships, transporta- 
tion was limited to the capacity and speed of horses and 
sailing vessels. There was little opportunity for more 
than a local business. Foreign commerce consisted al- 
most exclusively of staple products, largely raw materials, 
as wool, cotton, tea, coffee, tobacco, etc., or such manu- 
factured products as became the raw product of other 
factories, as cloth, leather, etc. 

Ruyers went abroad and bought these articles, bring- 
ing them home for sale to the users. They paid for them 
whatever prices they could get the sellers to make. Those 



46 Manual of Cost Engineering and Estimating 

were the days when the demand exceeded the supply, 
when production methods were crude, laborious and slow. 
Overstocking was rare. There were neither traveling 
salesmen nor bargain counter rushes. 

If a man wanted a manufactured article he went to 
the local artisan. If none were near, he bought the raw 
materials and did the making, more or less crudely, him- 
self. If he bought it, he paid such price as he could get by 
sharp bargaining. 

The maker needed but a simple price-making system. 
He took the cost of material, the wages of the workmen 
during the time required to make the article, and added 
as much as he thought he could get. The one-price sys- 
tem had not arrived. He aimed to allow a margin wide 
enough to cover his expenses, a fair profit, and leave some- 
thing to take off, so that the customer would think that he 
was getting a bargain. 

As the population increased, and transportation fa- 
cilities developed his market enlarged. He made his 
products in greater quantities and sold them too in larger 
lots, to others, for resale to the consumer. Ease of trans- 
portation made it possible for the middleman to get prices 
on what he wanted from several makers. Price lists 
were developed. This again created a demand for more 
definite knowledge of cost that the margin might be nar- 
rowed to meet competition without losing the fair amount 
of profit demanded by good business. 

Now the manufacturer, or his accountant, found that 
the measurable items were labor or wages, and the cost of 
material. The exact amount of other elements, being 
more or less indefinite in the individual articles, could be 
known positively only in the gross amount. The total of 
the expenses for the measurable items and the total for 
items deemed unmeasurable were compared, the percent- 
age of the latter to the former determined and the theory 
evolved that if the expenses of wages and material were 
calculated and this percentage of the so-called "overhead" 
added, the result would prove to be the cost. If the goods 



For Paper Box Manufacturers 47 

were sold at a price greater than the amount thus deter- 
mined, the margin above the total of the three items would 
be net gain. 

This proved a very practical method as long as the 
conditions, under which it had been evolved, were main- 
tained. Some factories are still able to prosper under this 
method of price-making. Nevertheless the great majority 
of failures for several decades have been directly trace- 
able to following this method under conditions very dif- 
ferent from those under which it was evolved. 

Gradually the manufacturers whose product could be 
made up with different grades of material or who broad- 
ened their business so that their product consisted of sev- 
eral distinct lines, found that an increase in the price or 
value of the material did not proportionately increase the 
amount of operating expenses. Neither was there a per- 
ceptible decrease in operating expense when cheaper ma- 
terial was used. These manufacturers changed the 
formula to omit the overhead element in connection with 
material; endeavoring to determine cost by adding a per- 
centage to represent overhead to the wages for time di- 
rectly applied on the factory order and adding the cost of 
the material to the total. The chief cause of loss, how- 
ever, where percentages of overhead were applied under 
either formula, has been one which was intended, and 
when properly considered, proves to be a very potent 
factor in saving expense, and a prolific source of increased 
profits — the labor-saving tool or machine. 

Few manufacturers realize the effect of introducing a 
machine to perform an operation previously done by 
hand. They become so accustomed to considering that 
wages are an indication of the cost of factory operations 
that they fail to recognize that the machine which per- 
forms the work formerly accomplished by five people, and 
with an outlay for wages of one person, decreasing the 
wage element eighty per cent, also introduces many other 
elements of expense that did not exist, or were inconsider- 
able, in the hand method. 



48 Manual of Cost Engineering and Estimating 

The product of most modern factories is intensely 
diversified, yet each item results from the application to 
selected material of varying amounts of the time of sev- 
eral processes. Some of these are performed by more 
or less mechanical equipment; others are still accom- 
plished by handworkers of varying degrees of skill. Cost- 
finding under modern conditions may thus be considered 
a highly complicated subject. 

The primitive manufacturer had to contend with few 
complications. His product was simple. He had but a 
small investment in equipment, no expense for power, re- 
pairs, supplies, and the multitude of other necessities 
created by modern processes of production. 

A modern manufacturer is faced with the demand for 
an individuality in the product required by nearly every 
customer. Even though he makes only paper boxes, his 
product is likely to be elaborately diversified. The in- 
ventive genius of the indefatigable Yankee has developed 
machinery for many processes. Single machine units in 
some instances require an investment of thousands of 
dollars. Some machinery can be used almost constantly 
during the entire working period of each day. Other 
machines, because the demand for their special processes 
is less, may stand idle the greater part of the time. Power 
must be provided. Replacement or depreciation consid- 
ered. The large investment demands a charge for in- 
terest. City, State and Federal Government demand 
taxes. Repairs must be made, and supplies furnished. 

Every process performed by machines involves a dif- 
ferent amount of investment. Depreciation must be cal- 
culated at different rates; motors are of various sizes and 
are run for varying amounts of time. The amount of re- 
pairs differs, as does also the amount and kind of sup- 
plies. Some processes require large areas of floor-space, 
others small. Some require highly paid skilled workers 
to get efficient results, others can be set and started by a 
skilled mechanic, and attended to by unskilled persons at 
low wages. 



For Paper Box Manufacturers 49 

Throughout the processes included in the modern fac- 
tory there is practically no uniformity in the items of ex- 
pense; nor in the time or conditions of operation. How, 
then, can there be any uniform proportion of wages and 
of the items which commonly comprise the overhead ex- 
pense account? 

The answer is clear. No such uniformity exists. Nor 
can such a theory or formula as has been described be re- 
lied upon to show even approximately the cost of making 
any item of product, to say nothing of an ever-varying 
series of special items which may be required to meet the 
individual ideas of consumers. 

Three essentials are paramount in considering 
methods of determining cost. Named in the order of 
their importance they are: Accuracy of result; Uniformity 
of application under like conditions; and Adaptability to 
all the variations existing in factories at present, or which 
may in future be developed. 

Accuracy is first, yet there are many manufacturers 
who do not realize its importance, and who ask. "What's 
the use of splitting hairs?" They seem to think that if 
they get within five or ten per cent of a correct result, that 
is near enough. They have no means of knowing whether 
or not they are accurately within five or ten per cent, and 
if they were that amount may represent the total of the 
profits on the transaction. 

The average manufacurer in considering elements of 
expense or variations from correctness is apt to consider 
these items in their relation to the total amount of the 
order or the volume of business. They do not realize that 
taking ten per cent as a fair net profit on the volume of 
sales, a variation downward of two per cent on the order 
because of inaccuracy means a loss of twenty per cent 
of the profit, the vital element of gain for which he as- 
sumes the work and cares of business. Half of one per 
cent means a loss of five per cent of the profits. 

A variation of a tenth of a cent in determining the 
ratio of distribution of an elemental item may through the 



50 Manual of Cost Engineering and Estimating 

multiplication of the item involved create an inaccuracy 
so great as to destroy all profit on the output of a process. 
On the other hand, the variation being in the form of an 
overcharge, the tendency will be to drive away business 
which could be profitably handled if true costs were 
known. 

Accuracy is unquestionably of prime importance in 
any plan of cost determination, yet the novice is very 
liable to confuse essentials with non-essentials. Accuracy 
in a rate is very much more important than accuracy in 
a result. A variation of one-half cent in a unit-rate 
makes a difference of five dollars in the apparent cost of 
a thousand units, while a variation of ten cents in the 
total can affect the profits only to the extent of ten cents. 

This explains the reason why the cost engineer some- 
times insists upon rates expressed in hundredths of cents, 
and at other times drops fractions entirely. The effect 
upon the final result is the deciding influence. 

Uniformity in the treatment of processes or in data 
where conditions are relatively the same is very essential, 
particularly where competitive conditions exist. Co- 
operation is the key note of the new competition. If 
manufacturers are to cooperate they should speak the 
same technical language and handle their problems in 
practically the same way. 

Under the old formulae of cost accounting, if one 
manufacturer applied the overhead to labor alone, adding 
the material to the total, while another applied his over- 
head expenses to both wages and material, a source of 
much trouble and misunderstanding developed. Many 
unthinking men have asked "What's the difference, pro- 
vided all of the expense is applied against all of the 
product?" The difference is very great. 

Suppose two customers are seeking prices on boxes 
for their respective requirements. One wishes ten thou- 
sand large skeleton boxes, the other needs ten thousand 
small covered boxes. The skeleton boxes involve a large 



For Paper Box Manufacturers 51 

amount of board with but little processing. The small 
boxes require far less material but much more effort in 
the making. 

The manufacturer who puts his overhead on both 
wages and material makes a high price on his skeleton 
boxes and a low price on the small boxes which involve 
less material. The manufacturer who applies the over- 
head on labor alone will make a low price on the skele- 
ton boxes and a relatively high price on the small boxes 
where the labor element is large. 

Each is making prices conscientiously according to 
his belief in connection with cost accounting. Each looks 
upon the other as a price cutter, because the only infor- 
mation they have about each other's prices is in connec- 
tion with the job that was lost. The wide variation in 
quotations seems to prove, according to the competitor's 
method of figuring, that the man who took the order for 
the skeleton boxes made a price at about the cost of the 
material. 

But the greater misfortune in such methods remains 
to be explained. The manufacturer who applies the over- 
head on both material and direct labor continually drives 
away orders in which materials are a large factor. Thus 
the proportion is constantly changing with the result that 
his output does not actually carry the full burden of over- 
head. His profits dwindle or disappear altogether. The 
one who puts it on labor alone drives away the business 
in which labor is the chief element with a like result. 

Under Cost Engineering described in succeeding 
chapters of this book, such discrepancies are entirely 
eliminated. Material is charged only with the expenses 
incurred on account of material; each individual process 
is assessed with only the expenses involved in its opera- 
tion and correct unit rates established which make over- 
charges and undercharges impossible. Prices based upon 
these methods are absolutely just to manufacturer, cus- 
tomer, and competitor. They not only eliminate losses, 



52 Manual of Cost Engineering and Estimating 

but make for progress in the industry because of a better 
understanding and greater confidence between paper box 
manufacturers. 

Adaptability to varying and variable conditions, 
placed third in the group of essentials, is hardly less im- 
portant than either of the others. 

Paper box factories differ from each other so greatly 
that no two of them may be said to be alike. Methods 
whose accuracy would be affected by adoption in different 
factories would be failures, or methods affected seriously 
by changes within the factory where established would be 
impracticable. 

Stiff box factories range in size from small concerns, 
employing three or four people, up to large concerns em- 
ploying hundreds. Stiff box factories are operated fre- 
quently in combination with and under the same man- 
agement as other lines, such as folding boxes, envelopes, 
novelties, shoes, printing, die stamping, cigar boxes, ship- 
ping cases, etc. 

Methods to be practicable must permit of every pos- 
sible variation in the product, every possible combination 
with other lines, and must not be adversely affected by the 
addition or discontinuance of other lines, without regard 
to beginning or end of the fiscal year or other period at 
which records may be closed. 

Under the requirements demanded by modern busi- 
ness conditions, the old methods of cost accounting must 
give way to the more advanced methods which have been 
developed through the science of Cost Engineering. 



CHAPTER FIVE 

Comparison of Cost Accounting and Cost Engineering 

Principles of Cost Engineering Unknown to Cost Account- 
ants — Reliance upon Formulae Taught in Cost Accounting Litera- 
ture — Investigation of Methods and Report of Joint Cost Com- 
mittee — Purpose of Records — Requirements of Ideal System — 
Remarkable Diversity of Methods Used in Representative Plants 
— Necessity of Correct Distribution of Expense — Methods of Cost 
Accounting — Percentage on Material — On Labor — On Prime Cost 
— On Man Hours — On Unit of Product — Inadequacy of Foregoing 
Methods — Examples of Paper Rox Cost Calculations, by H. L. 
Stortz — Cost of Shipping and Delivering — Table and Chart Show- 
ing Lack of Relation Retween Wages and Other Expenses — State- 
ment of Cost Engineering — Suggestions to Student of Cost 
Engineering. 

In the preceding chapters references, more or less 
critical, have been made to methods which were termed 
"cost accounting." 

This term is used to designate the methods employed 
by the accounting profession up to this time, and sanc- 
tioned, nay advocated, by the authors of a considerable 
list of books written by professional accountants, most of 
which include in their titles the term "cost accounting," 
and all refer to the procedure described by the same title. 

Throughout the literature of cost accounting the only 
principles recognized are the principles of accountancy 
relating to the records of transactions, viz: "For every 
debit there must be a corresponding credit," and the cor- 
relative requisite that "The sum of the debits and the sum 
of the credits must be identical." Principles of cost or of 
expense distribution are ignored. Therefore, since they 
were discussing the problems of manufacturing costs, we 
must assume that such principles are unknown to their 
authors. 

Formulae are referred to in the preceding chapters 
in connection with cost accounting methods. It is upon 
formulae that cost accounting relies. In practically every 
phase of the works on cost accounting it is evident that 
the authors have mistaken form for essence. 



54 Manual of Cost Engineering and Estimating 

Decade after decade has passed. Methods of manu- 
facture have been improved, machines have displaced 
wage earners to a large extent, still the cost accounting 
formula remains practically as it was in the days of hand 
processes exclusively. Direct wages still is cherished in 
the mind of the accountant as the basis, or at least a sub- 
stantial part of it, for the distribution of all items of ex- 
pense, which, because he does not know how to distribute, 
he assumes to be unmeasurable. 

In connection with the work of the Joint Cost Com- 
mittee of Paper Box Manufacturers' Associations, of which 
he is secretary, Mr. Henry L. Stortz, of Philadelphia, made 
an exhaustive study of the various phases of cost account- 
ing, as presented by the leading authorities upon that sub- 
ject, together with the weaknesses of each, for use in con- 
nection with the paper box industry. The author feels 
that this report, prepared primarily for the purpose of de- 
termining what method would be best for the industry, 
will be of interest to the trade. 

Mr. Stortz says: 

"The fact that a Joint Committee has been instituted, repre- 
senting the organized portion of the paper box-making industry, 
with the specific purpose assigned to it by the several associa- 
tions, of investigating and discussing the subjects of Costfinding 
and Estimating, with the final object in view of agreeing on a 
system or method of Costfinding and Estimating that will be 
practical and applicable to our industry, and that will not only 
have the approval of the committee, but will be endorsed and 
accepted by others in the industry, as the approved universal 
Costfinding Method of the Paper Box Industry, is sufficient evi- 
dence in itself that the subject of Costfinding is recognized by 
the industry as one of vital importance. 

"We realize that in taking up this important matter with 
an earnest effort to attain a conclusion, and results, we are 
keeping our industry abreast with the times and with modern 
business thought and method. 

"We will endeavor to present the various methods of cost- 
fiding in such a way that the committee can intelligently and 
safely assume the responsibility, as the result of their delibera- 
tion, of recommending and endorsing a certain one, to be ac- 



For Paper Box Manufacturers 55 

ceptcd as final by the Association and the entire industry of paper 
box making. 

"In general the purpose of cost records and accounting may 
be summed up under four heads: 

1st. To show the actual Cost of operation or perform- 
ance. 

2nd. To serve as a basis of predicting future per- 
formances, or in other words a basis for Estimating. 

3rd. To show the actual cost of production and thereby 
establish a basis of legitimate profit taking and Selling Price. 
4th. To form the basis of managerial effort toward 
economy, Cost Reduction and Efficiency. 

"It is important, therefore, that we first endeavor to define 
an ideal system, and with this in mind, try to find the system 
which will come nearest to it, and apply to our industry. 

1. The system should show the actual cost of operation, the 
facts existing (the records of events), and the resulting final cost 
sheet should be a statement of actual facts as nearly accurate as 
practical application permits. 

2. The system should be as simple as possible, consistent with 
the problem in hand and the result needed, but should not sacri- 
fice accuracy or facts for simplicity. 

3. It should be practical in its application to the industry. 

4. Should be of proven merit and not an experiment. 

5. The system should be of proven value in creating a simple 
and reliable estimating method. 

6. The system should be a guide to efficient management. 
"The factors of cost in a manufacturing industry are three — 

Material, Labor, Expense. 

"Material — It is an accepted truth that the materials in any 
given lot of boxes can be calculated. Its cost, with a reasonable 
allowance for waste or spoilage, is acceptable. 

"Labor — By keeping a record of the time spent, or the piece 
work cost, of a given lot of boxes, the amount of money paid out 
for the labor can be ascertained. 

"These items — Material and Direct Labor — may consistently 
be called ascertainable for tangible costs. The problem that now 
arises is: What is the best method of distributing the expense? 
If we solve this problem we have solved the question of a good 
practical cost system. 

"Our committee has made an investigation of the methods in 
use in representative plants and others, and has found a very wide 
divergence in the practices followed. Some took their total ex- 



56 Manual of Cost Engineering and Estimating 

penses for the year and found what proportion it bore to the 
sales, and used this percentage. Some took this total expense 
and after deducting the profit for the year found what percentage 
the expense bore to the cost. Some used this percentage added 
to the cost of material only. Some used this percentage and 
added it to the cost of material and labor. Some used the per- 
centage and added it to the labor only. Some found what the 
expense was per thousand boxes and added it to the prime cost 
of materials and labor per thousand boxes. Some took the profit 
for the year plus the expense and used this for establishing selling 
prices. Some figured the cutting room or cost of cutting as an 
expense and kept no time of cutting. Some considered glue, 
paste, twine, an expense. Some figured depreciation as an ex- 
pense, others did not. Some considered executive salaries and 
what they drew out of the business as profit. Some who owned 
their buildings did not charge any interest on their investment. 
In fact in only a few cases, where they had a modern cost system, 
did we find interest on investment included in the cost, and some 
we found had no way of figuring their cost whatever, merely 
making an arbitrary price, based upon guess, and their desire to 
obtain the order. 

I have recently noticed, in a trade journal, an article by a 
Western paper box manufacturer in which he advocates the use 
of a 'key.' That is, he finds a factor with which to multiply 
the cost of labor and materials to give him the selling price. How 
this is done, in this industry, is a mystery. 

"It is needless to say that under such chaotic conditions as 
the foregoing there would be a wide variation in prices and quo- 
tations. I have known of cases where prices, quoted when board 
was $50.00 per ton, that were lower than the prices quoted when 
board was $25.00 per ton. This is the condition we want to 
overcome by the universal adoption of a costfinding method. 

"The speaker, having made an exhaustive study of the sub- 
ject, and having applied a modern cost system in his own plant, 
is convinced that none of the old methods are correct, and will 
endeavor to show where they fail to be logical, or in harmony 
with the facts, in a paper box factory. 

"In explaining the difference between the various methods, it 
will be more clearly shown by quoting from a chapter on this 
subject found in a textbook of the Alexander Hamilton Institute, 
of New York, written by Dexter S. Kimball, Professor of Design in 
Cornell University, and Seymour Walter, Professor of Accounting, 
Northwestern University School of Commerce. 

" 'Distribution of Factory Expense. It will be clear that 
while the cost of direct labor and direct material can be allocated 
with a fair degree of accuracy to the jobs into which they enter, 



For Paper Box Manufacturers 57 

the problem of distributing the factory expense so that each job 
shall bear its share of burden, is a difficult problem, and one that 
seldom admits of accurate solution. It is essential, however, that 
these expenses be allocated as closely as possible, especially where 
several lines of product are manufactured. Not only should each 
production order be charged with expense in proportion to the 
use it has made of the manufacturing facilities, but if close watch 
is to be kept of these expenses, their distribution should show the 
departmental responsibility for their creation. 

" 'Nearly all the costfinding systems in use are compromises 
which give approximate costs only. A number of these approxi- 
mate methods are in wide use, and it may be helpful to discuss 
briefly the characteristics and limitations of the most important 
ones. 

" 'The basic principle of all of these methods is to use some 
tangible factor of the job as a basis of comparison by which to 
measure the indirect expense which should be charged against it. 

" 'It will be remembered that direct material and direct labor 
are tangible factors that attach themselves to all jobs in a direct 
and measurable fashion. 

" 'The time expended upon a job is also a factor that can 
be determined accurately, whether it be the time of a workman 
or the time of a machine that has been used. 

" 'Practically all of these systems of expense distribution as- 
sume that one or more of these tangible factors is a measure of 
the proportionate amount of expense that the job should bear. 

" 'The most important of these systems will be briefly dis- 
cussed : 

a — Distribution by percentage on Material Cost. 

b — Distribution by percentage on Labor Cost. 

c — Distribution by percentage on Prime Cost (i. e. Labor 

and Material.) 
d— Distribution by percentage on Man Hours. 

" 'A more advanced and more accurate method known as dis- 
tribution by production factors deserves special attention. 

" 'Distribution by Percentage on Material Cost. In this method 
of distributing the expense it is assumed that the burden varies 
directly with the amount, or cost, of the material that enters into 
the product. Defects — It will be clear that in a continuous 
process involving the production of only one commodity, as is 
the case in a cement plant, where every particle of the product 
makes the same use of all of the facilities of the plant, this sys- 
tem will often prove adequate. It is sufficient in such simple 
cases to divide the entire cost of production by the total weight 
or volume of the product and establish unit factory costs that are 
fairly accurate — all that is required is division of expense over 
a uniform product. If, however, more than one commodity, or 
more than one variety of the same commodity, is manufactured, 
this method is clearly inaccurate, unless each unit of each line 
of product makes equal use of all of the factory facilities. Further- 
more, if the cost of the materials is used as a basis, it is obvious 
that a line of goods involving expensive materials will be burd- 
ened more than one in which a less valuable material is used. 



58 Manual of Cost Engineering and Estimating 

" 'Distribution by Percentage on Labor Cost. In this method 
of distributing the expense it is assumed that the burden varies 
directly with the direct labor expenditures on the job. Defects^ — 
In shops where the product is closely similar in kind, and does 
not greatly differ in size, this method may, in some cases, give 
results accurate enough to satisfy the user. It has, however, 
serious limitations. First, this method does not discriminate be- 
tween the work done by a rapid workman, and the cost of work 
done by one less rapid, thus the job which takes a rapid work- 
man, receiving 60c per hour, four hours to complete, is burdened 
with the same expense as a job done by a slower workman earn- 
ing 40c per hour, and requiring six hours' time, yet the slower 
man has greater use of the shop facilities, power, heat, lighting, 
floor-space, tools, rent, etc., and clearly it has cost more to pro- 
duce the work with the slow man. Furthermore, because of the 
decreased rate of output due to the slower man, there is less total 
output over which to spread expenses, and each part must bear 
a greater proportion as the rate of product falls. Expense does 
not vary directly with product, but increases relatively as pro- 
duction decreases. 

" 'This method also fails entirely to differentiate between 
cost of large work and small work and the error may become 
large where the size of product and size of machinery vary wide- 
ly. Thus the expense charged to a job involving $10 worth of 
labor, by a mechanic using a file only, is exactly the same under 
this method as that laid upon a job involving the same labor 
charge, but done on a very large or expensive machine, requiring 
the use of much greater floor space, heating, lighting, power and 
supervision. The work done on a very costly automatic machine 
will, under this method, bear a very small expense burden though 
it is evident that the interest charge alone is much greater for 
the automatic machine, than for the hand work, which may bear 
heavy expense charges. 

" 'Distribution by Percentage on Prime Cost. In this method 
it is assumed that the expense varies directly with the Prime Cost 
(Materials and Labor). Defects — This method has the same in- 
herent defects and limitations as those previously discussed since 
it combines the basis of both. Where the value of the Direct 
Labor is small compared to the value of the Material, and method 
approaches the percentage on material plan; on the other hand 
if the material value is relatively low, the method approaches the 
percentage on labor plan of distribution, and in either case in- 
volves the errors and limitations of those methods. 

" Tn the general case of a factory making a varied product, 
one piece may have a relatively high labor value and the very 
next one have a relatively low labor value, and distribution by 
this method is, in such cases, not only inaccurate, but illogical. 
A manufacturer doing a mixed business will find difficulty in 
competing on jobs involving much material and little labor if his 
cost is based on this method. 

" 'Distribution by Percentage on Man Hours. In this method 
of distributing the total expense it is assumed that the expense 
which any piece of work should bear is directly proportional to 
the number of man hours that have been expended upon it. 
Defects — This method is no better than the percentage on labor, 
or any of the other methods so far as the differentiation between 



For Paper Box Manufacturers 59 

the use of equipment of different value and floor space is con- 
cerned. The same hourly rate is applied to a hand worker as is 
applied to a $5,000 complicated machine. This results in over- 
charging the cheap product and undercharging the expensive 
work. 

" 'Inadequacy of the Foregoing Methods. It will be clear that 
under all the plans of distributing expense that have been dis- 
cussed, an averaged result is obtained. None of these methods 
takes account of the fact that expense does not weigh equally over 
all parts of the plant or productive activities. It is for this rea- 
son that these methods apply only with some semblance of ac- 
curacy, where the conditions are uniform, where wages do not 
vary greatly, where the size and character of the equipment do 
not differ, and where the lines of product are not diverse in 
character. Where these simple conditions cannot be obtained 
and accurate costs are desired, the averaging and percentage 
methods described are not applicable.' " 

"We have here the most modern and expert thoughts on the 
different methods in common use. There is, however, another 
method. (See 'Proper Distribution of Expense Burden' and Pro- 
duction Factors in Cost Accounting and Works Management' by 
A. Hamilton Church.) This method has been brought to a very 
perfected stage of application in the Denham System which I will 
take up later, but in order to bring the different known methods 
of cost figuring that are used in the Paper Box Industry to your 
attention, I propose to illustrate their application by a demon- 
stration — Estimating on a given lot of boxes by the different 
methods and showing the diversion of cost caused by the differ- 
ent ways of adding overhead expense. 

"Because of the nature of the paper box business it is neces- 
sary in probably ninety-five per cent of cases to quote prices be- 
fore goods are manufactured. There is, therefore, a constant ten- 
dency to quote prices too low because of the fear of competition 
and loss of the order. 

"It is essential that the estimator have a practical knowledge 
of the business and a correct method of figuring, based on the 
actual conditions existing in his factory. This, a cost system 
would give him; and what is fundamentally required therefore, 
by the industry, is a uniform estimating system. 

"With a cost system established that gives a proper distri- 
bution of the expense burdened, we necessarily create a funda- 
mentally correct estimating system. With this once recognized 
by the industry, the estimator, with the proper tables of cost of 
materials, and labor costs, should be enabled to make a reliable 
estimate of the cost of the product. 

"In the estimates here presented, the cost or value of board 
and materials is taken at approximate prices prevailing at the 
time they were made. Also the item of waste or spoilage is taken 



60 Manual of Cost Engineering and Estimating 

at an arbitrary percentage and it is not intended that those ex- 
amples shall be taken as a precedent for establishing an actual 
cost in any particular plant. 

"It is intended by these examples to illustrate the argument, 
and demonstrate why there is a large variation in prices quoted; 
and to show the results obtained by different methods of calcu- 
lation and the urgent need of a universal estimating and cost- 
finding system : 

"We will take a lot of boxes, say 1,000 — 9x5x1% cut from 
50 Plain Chip — 26 x 38 — I am taking this size because it cuts 
clean and is a comparatively simple calculation throughout. 

Box \ 

9x5x1% ) Lid 

3y*x3y4 Like 

12%x8% I do 

3x3 9 out / 

Box 112 sheets 50 plain, $70 $3.50 $3.92 

Lid 112 sheets 50 plain, $70 3.50 3.92 

$7.84 
Put up % Kraft 13,000 4 .50 

$8.34 
2% Waste .16 

Material Cost $ 8.50 

Labor: 

Wages only: 

Bending 20c per M boxes $0.40 

Staying 40c per M boxes .80 

Lidding up 30c per M boxes .30 $ 1.50 

Prime Cost $10.00 

We will assume for the purpose of figuring expense the same 
plan that illustrated the hypothetical case quoted from the text 
book. 

(1) We have therefore in the case where expense is figured 
against Materials: 

Materials $ 8.50 

Labor 1.50 

100% on Materials 8.50 

$18.50 
20% Profit 4.63 

Selling Price $23.13 



For Paper Box Manufacturers 61 

(2) Expense figured against Labor only: 

Materials _ $ 8.50 

Labor 1.50 

100% on Labor 1.50 

$11.50 
20% Profit 2.88 

Selling Price $14.38 

(3) Expense figured against Prime Cost, Labor and Material: 

Materials $ 8.50 

Labor 1.50 



Prime Cost $10.00 

50% Prime Cost 5.00 



$15.00 
20% Profit 3.75 



Selling Price $18.75 

(4) Figured on Hour Basis: 

Materials $ 8.50 

Labor 1.50 

Labor — 

Bending 4 hours 

Staying 4 hours 

Lidding 2 hours 

10 hours @ 25c per hour 2.50 

$12.50 
20% Profit 3.12 

Selling Price $15.62 

(5) Expense figured on Bate per 1,000 boxes: 

Expense 5,000 $10.00 

Output 500,000 for period 10.00 

$10.00 per 1,000 $20.00 

20% Profit 5.00 

Selling Price $25.00 

"Here we have a variation of $10 between the highest and 
lowest Selling Prices, — all figuring a profit of 20% on the Selling 
Price. If, therefore, you would add the difference due to varia- 



62 Manual of Cost Engineering and Estimating 

tion in profit taking, our difference might possibly be more ex- 
treme. 

"And this is the simplest kind of a box we can take up. 

"It must be here understood that the efforts of the Cost 
Committee can not be directed toward uniform profit taking and 
no : attempt can be made toward price fixing. The matter of 
profit taking is one of policy and will not allow of any dictation. 
All that can be said on this subject at this time is that percentage 
of profit should always be figured on Selling Price. 'Honest 
Business requires a fair profit.' No order should be taken that 
does not include a profit. 

"Now, for the edification of the industry, we will carry the 
illustration still further, and endeavor to find what these various 
methods show on the same box with an elaborate finish. 

"For example, suppose it is to be a telescope covered white 
glazed, no edge, end label, with 2 lace flies. Tops printed in 
flat bronze : 



Material, 



Labor 



Box 112 sheets 50 @ $70 $3.50 $3.92 Bending up $0.40 



Lid 112 sheets 50 3.92 

Lining 224 sheets 26 x 38 @ 80c 1.79 



Stay 13,000 inches T / 8 -stay. 
Box 150 sheets wh. glz. (c 
Lid 150 sheets wh. glz. (c 
Tops 94 sheets wh. glz. (c 
Btm. 94 sheets wh. glz. (e 



$9.63 
.50 



45c 
45c 
45c 
45c 



.$2.20 



488 sheets @ 45c 

2 laces 9" — 2 out 23" strips 

1,000 laces @ 85c .85 

Printing tops 1.25 

Printing end labels — 1 color 
Labels 5x1^—25 sheets 20x24 

book @ 60c .75 

$15.18 
Waste 2% .32 

Glue and Paste 

488 sheets @ $1.00 per ream — 
2 with end labels and laces. 1.00 



Material $16.50 

Labor 6.00 



Staying .80 

Cov. box $0.50 

Cov. lid .50 

Bot. Pap. .50 

Top by hand.- 1.00 

End label .50 

Turning in .50 

Lidding up .30 $4.80 



$6.00 



Prime Cost -___$22.50 



For Paper Box Manufacturers 63 



(1) Percentage on Materials: 

Material $16.50 

Labor 6.00 

100% on Material 16.50 

$39.00 
20% Profit 9.75 



$48.75 $48.75 



(2) Percentage on Labor: 

Material $16.50 

Labor 6.00 

100% on Labor 6.00 

$28.50 
20% Profit 7.10 



$35.60 $35.60 

(3) Percentage on Prime Cost: 

Material $16.50 

Labor 6.00 

$22.50 
50% on Prime Cost 11.25 

$33.75 
20% Profit , 8.45 

$42.20 $42.20 

(4) On expense against Hours: 

Material $16.50 

Labor 6.00 



$22.50 



Bending 


4 


hours 


Staying 


4 


hours 


Cover 


5 


hours 


Bottom 


2y 2 


hours 



Hand work 12% hours 
T. I. 5 hours 

Lid up 2 hours 



35 hours @ 25c per hour 8.75 



$31.25 
20% Profit 7.80 



$39.05 $39.05 



64 Manual of Cost Engineering and Estimating 

(5) Expense on Rate per 1,000: 

Prime Cost $22.50 

$10.00 per 1,000 10.00 

$32.50 
20% Profit 8.15 

$40.65 $40.65 

"A variation of $13.00 per 1,000 in the Selling Price which 
may be changed according to whether you figure glue as an 
expense. 

"The same box made on the Stokes & Smith Machine: 
9x5x1% 
Material Labor 

Box 112 Shts. No. 50— $70— $3.50. _$3.92 Bending up $ 0.40 

Lid 112 Shts. No. 50— 70— 3.50. _ 3.92 Staying .80 

Cov. Box} 

224 sheets Is, News 80c 1.79 Cov. Lidj S&S .40 

Lidding up .30 

$9.63 Gluing off .50 

Lacing Machine .50 

13,000 inches stay $0.50 End Label .50 

Box 250 sheets 20x26 @ 2.75— 55c 

Lid 250 sheets 20x26 @ 2.75— 55c 2.75 $ 3.80 

2 laces— 1,000 strips .85 

Labels .75 

Printing Tops 1.25 

$15.73 
2% Waste .32 

$16.05 
Glue 1.00 

$17.05 



(1) Against Material: 

Material $17.05 

Labor 3.80 

100% on Material 17.05 



$37.90 $37.90 



For Paper Box Manufacturers 65 



(2) Against Labor: 

Material $17.05 

Labor 3.80 

100% on Labor 3.80 



$24.65 $24.65 



(3) Against Prime Cost: 

Material $17.05 

Labor 3.80 

$20.85 
50% on Prime Cost 10.40 

$31.25 $31.25 

(4) Against Hours: 

Material $17.05 

Labor 3.80 

21 hours @ 25c 5.25 

$26.10 $26.10 

Hours: 

Bending 4 

Staying 4 

B & L 4 

Gluing 4 

Lacing _ 2V 2 

End Labels 2% 

21 Hours @ 25c 

(5) Against Rate per 1,000 Boxes: 

Material 1 $17.05 

Labor 3.80 

$20.85 
$10.00 per 1,000 boxes 10.00 

$30.85 $30.85 

"A variation of $13.00 per 1,000 boxes. 

"You will notice that in these illustrations we have not con- 
sidered cutting as a separate item of cost. Evidently then, in 
these estimates, we have either not figured it in at all or it is 
indicated in the expense. To include cutting in the expenses 
has the undoubted advantage of simplicity, but, we unquestion- 



66 Manual of Cost Engineering and Estimating 

ably sacrifice facts. It is quite sure that we cannot make a box 
without a cutting room, and it is a fundamental necessity — but 
to place it under the Expense Burdens is just as faulty as if we 
counted all direct Labor under Expense Burdens. It is quite 
evident that the job accumulates cost in proportion to the time 
expended on the job in the Cutting Boom just as it does in the 
finishing process. If we fail to consider the cutting room as a 
direct labor cost, how would we consider the cost of a lot of 
platforms or blanks on which there was no finishing? Further- 
more the expense of cutting bears no relation to the wages or 
labor time of the making or finishing and we have just as much 
expense in cutting 1,000 boxes on which the direct labor finish- 
ing is $1.50 as on 1,000 boxes on which the direct labor finishing 
is $6.00. We find, therefore, that where this has been considered 
a common practice, is to count a certain sum for cutting a given 
unit as, for instance, 100 or 1,000. This is often done arbitrarily 
and sometimes is figured at a fixed amount, — irrespective of 
size. Sometimes it is figured based upon the quantity and size 
and again on the number of sheets cut. The latter method is 
probably more nearly correct if the figure bears any true rela- 
tion to the output of the machines and the peculiarities of the 
job. Evidently these methods are fundamentally wrong and in- 
accurate. 

"It has not been found practical in the average shop to pay 
piece work for cutting because of the great variety of work. 
Therefore, the universal practice is to pay the workman and 
help by the week, hour or day, so that in figuring the cost of 
cutting to arrive at any degree of accuracy we must know the 
time on the job, or, for the purpose of estimating, we should 
know the average output of the various machines. 

"Now, having illustrated the difference in cost figuring 
caused by the different methods of Expense Distribution we can 
readily understand why there is considerable difference in 
prices named. 

"We can also analyze the methods and find their defects. 
We have in none of these estimates taken into consideration the 
difference in cost occasioned by work done on a costly machine 
such as a Stokes & Smith, and a cheap machine such as a Hand 
Topper, or covering machine, or on the tables by hand. The 
methods illustrated have carried the same average burden on all 
— irrespective of Investment, — cost of maintenance and super- 
vision — comparing the lowest cost obtained by any method on 
the Stokes & Smith made box, we find the per cent against 
labor only, to be the lowest, viz., $24.65, whereas the same box 
made in the old style way on a Stripping Machine is shown to 
be obtained by the same method and gives us $28.50. Now, it 



For Paper Box Manufacturers 67 

is quite apparent that if the percentage of overhead is correct 
as an average it is too low on the Stokes & Smith Machines and 
too high on the Stripping Machines and Hand Work and the 
apparent advantage or reduced cost obtained on the Stokes & 
Smith Machines is probably overbalanced or at least equalized 
if the percentage applied were in the proper relation to the 
actual expense. 

"In one case we have a very low plant investment and in 
the other a considerable higher one. In the case of hand work 
we have a cheap wooden table, glue pot and brush and in the 
other a complicated machine requiring power and expert super- 
vision — a very much larger depreciation and consequently a 
proportionately larger Expense Burden — and if the machines are 
not kept working, a very much larger expense for idle time. 

"We find consequently a tendency to quote very low prices 
on the class of work made on the Stokes & Smith machines for 
two reasons — 

First. Because where the average percentage of Expense 

Distribution is used, there is seemingly a very much larger 

reduction in costs. 

Second. The desire to keep the machines going and 

fully occupied is more intense and prices are affected thereby 

at sacrifice of profit. 

"To summarize the results of this illustration in the order 
demonstrated we have — 

First Method. Per cent against Material. 

This is glaringly defective as it makes no distinction be- 
tween a common box, taking little time and labor and machinery 
to make and a complicated box taking much time, labor and 
machinery and skill. The user of this method is immediately at 
a disadvantage in competition when price of materials advance 
and increases the inflated prices — making the conditions worse — 
it has no Basis in Fact. 

Second Method. Per cent on Labor. 

This method has an advantage in simplicity in shops where 
the boxes made are closely similar in kind and do not differ 
much in size or process of manufacture — but, in shops where 
there is a larger variety of work from the simplest form of 
paper box to the complicated fine candy, perfumery, papeterie 
boxes requiring a fully equipped plant with modern automatic 
machinery or semi-automatic machinery the method is defective 
as it does not discriminate between the slow unskilled worker 
and the quick skilled worker. It fails to discriminate between 
simple work requiring none or very little and cheap machinery 
and work requiring expensive machinery and high maintenance 



68 Manual of Cost Engineering and Estimating 

cost — such as for example between Hand Work and the Stokes 
& Smith Machine wOrk — between Single Machine Staying and 
Quadruple Machine Staying, etc., or for example between Staying 
Machines and Covering Machines. It has a tendency to encour- 
age the sale of boxes requiring cheap and low priced labor. 

Third Method. Per cent on Prime Costs. 

This method has the same defects of both the others since 
it combines the basic principles of both. 

In the case of a factory making a variety of work we may 
have a box in which the materials are relatively high in value to 
the Labor. In the next case we may have a box in which the 
materials are relatively low to the labor. The box, therefore, 
which has the relatively high material cost will carry an excess 
of expense which is contrary to the facts as the actual conditions 
are that the box that requires most labor and equipment should 
carry the larger portion of expense, so that in comparison it is 
not as trustworthy as the Second or Percentage on Labor Cost. 

This method also will work to a disadvantage in the industry 
as it does not reward the manufacturer of quality and boxes re- 
quiring skill and much labor and machinery in the same propor- 
tion as it does the manufacturer of common boxes in which the 
biggest element of cost is materials. It also fails to discriminate 
between cheap methods of production and expensive methods. 
It does not consider the element of plant investment. It fails to 
discriminate between the high cost machinery and the low cost 
equipment. 

Fourth Method. Expense on Labor Hours. 

This seems to be more logical than the others because it 
takes into account the value of time,— the cost increases and de- 
creases with time,— but, it required close watching of time ex- 
pended and it does not take into consideration the difference in 
the cost of labor. For instance, if we had a lot of boxes requir- 
ing 10 hours on the Staying Machine at say 30c per hour, the 
expense would be the same as if we had a job requiring 10 hours 
of a Lidder Up at say 10c per hour, — or, again if we had a lot 
of boxes that took 5 hours on the Covering Machine at 25c per 
hour, making a cost of $1.25 for labor, and on the next job we 
have one taking 5 hours on the Stokes & Smith machines with 
expensive equipment and the charge would be the same for ex- 
pense, although the operator might be receiving considerable 
more pay on the Stokes & Smith Machine. 

Evidently this method is no nearer the facts than any of the 
others. In fact it has the same defects, — it does not differentiate 
between the use of equipment of different value and space oc- 
cupied. When applied to factories making a large variety of 



For Paper Box Manufacturers 69 

boxes equipped with high priced machinery and facilities, this 
method will be a disadvantage in making competitive prices on 
high class hand work and there will be a tendency to encourage 
the securing, at a loss of profit, of a common grade of work that 
passes through the factory quickly and that uses high priced 
machinery. 

Because this method does not consider expense burden in 
proportion to plant investment and floor space, but entirely on 
the basis of hours expended, there will be no corresponding 
advantage on work that does not require this high priced equip- 
ment. Such work, when possible to secure, will merely be carry- 
ing the excess burden of expense unjustly placed on it. 

5th. It becomes almost impossible to establish a rate per 
1,000 boxes where there is a variety of work of different quality, 
different quantities and different degree of details — it is evidently 
only applicable where the output is of very close or similar 
character as to size, quality and finish and where the runs are 
very nearly constant. It is also quite evident that the rate per 
1,000 boxes is equally defective if we use a uniform rate per 
1,000 for a plain unfinished box, where the output is large, as 
we do on an elaborate finished box where the output is small. 
It may be applicable to a consumer's plant using one kind of box 
only and only a few sizes. But it is absolutely a failure when it 
comes to meet the requirements of the average box shop. 

"Apparently we have not found in any of these methods the 
ideal cost finding system for our industry. Primarily because 
they do not fit the average conditions found in the Paper Box 
Industry and because they are not true to facts. 

"However, there is a method known to many of us — Cost 
Engineering, popularly called the 'Denham System.' Those who 
have used it will agree with me when I claim that it meets the 
requirements of our Industry, both as to facts established and 
practicability. This system is up-to-date in its application and 
is perfectly logical and scientific in its distribution of the expense 
burden — this is its chief value. All the items of expense are 
allocated and distributed in their proper relations to the ele- 
ments involved, and the plant is divided into its various process 
centers, — each department, machine or group of machines or 
process accumulates unto itself its proportion of the Expense 
Burden upon the time the department is running on production, 
— in other words, the chargeable hours. The result of this data 
and statistics secured by the system establishes an hour rate for 
each one of the divisions instituted. For example, in a certain 
plant we have a rate established for the Cutting Boom in which 
the groups of machines are separated as follows: 



70 Manual of Cost Engineering and Estimating 

Cutting Boom. 

1. Carvers or Guillotine Knives. 

2. Shears. 

3. Single Scorers. 

4. Double Scorers. 

5. Creasers 

6. Corner Cutters. 

7. Paper Slitters. 

8. Stokes & Smith Cover Cutter. 

9. Die Cutting. 

10. Hand Work and Miscellaneous. 

Finishing Room. 

11. Flange Stitching. 

12. Wire Stitching. 

13. Metal Edge. 

14. Enders. 

15. Staying Machine, 2nd Floor. 

16. Staying Machine, 3rd Floor. 

17. Gluing or setting up hand work, 2nd Floor. 

18. Floor work. 

19. Top and Bottom Papering Machines. 

20. Stokes & Smith Machines. 

21. Covering Machines. 

22. Embossing. 

23. Hand Work, 3rd Floor. 

24. Lacing Machines. 

25. Shipping and Delivery. 

26. Special Stocks. 

27. Merchandise and Materials. 

"For each of these divisions a rate per hour is determined, 
which embodies the proportions of the expenses, according to 
use, plus the workmen's pay. Rent and heat are charged accord- 
ing to floor space occupied; Plant investment expenses, accord- 
ing to the cost of the equipment; power according to the horse- 
power hours used; light in proportion to the time used; Factory 
Administration according to the sales of chargeable hours, etc. 
Depreciation is taken care of in each department in proportion 
to the established depreciation for that department. Insurance, 
interest, in fact every single solitary expense, according to the 
books of the company, is allocated and distributed by some 
logical method so that the resulting rate per hour is a true ex- 
pression of the facts existing for a period of a month, or twelve 
months, the twelve months period covers all seasons of the year, 
good and bad. When the system is continued for a period of 
years it shows the relative costs in lean and fat years. It estab- 
lishes a safe rate to use for each operation in figuring your esti- 



For Paper Box Manufacturers 71 

mates. It will show you when your costs are going up; it causes 
you to look for reasons; it spurs you on to efficiency, and to en- 
deavor to reduce your rates; it helps you in looking for work 
for the idle machines. It establishes facts. 

"The system includes a method of tracing the exact cost of 
any job, and proves your estimates by facts; it tells you on which 
jobs you make money, and on which you do not, because it does 
not use a per cent against labor, or against materials, or against 
prime cost, or against sales, or against per thousand boxes out- 
put. But, the rate established in each department is a true state- 
ment of the average cost of running that department for an hour, 
year in and year out; and it is a safe figure for you to use in 
your calculations. 

"It is impossible for me to give you full details of the sys- 
tem. But I can show you how the system works in its applica- 
tion after the rates are established. 

I want to show you how a lot of boxes may be estimated by 
the same system and how it may be proven. And for this pur- 
pose we will take the same lot of boxes used in previous illus- 
trations. 

A lot of 1,000 Boxes 9x5x1% and will figure it made in 
three ways: 

1. Stayed Only, 

2. Stripped and Covered on the Stripping Machine and 

Strip Top Machine; 

3. Covered on the Stokes & Smith Machines. 

We arrive at the cost of materials by calculations the same 
as in any of the other methods. 



72 Manual of Cost Engineering and Estimating 



(1) 1,000 Plain Chip Board Boxes, and Lids, Stayed only. 



Box 

9x5x1% 

3%x3% 

12^x8^4 
3 3 9 out 



Lid 



like 



do 



Board in Boxes 112 sheets 50 pi. @ $70.00 $3.92 

Board in Lids 112 sheets 50 pi. @ $70.00 3.92 

Stay for Box ) 

Stay for Lids] 13 M. %" Kraft Paper . .50 

String and Strips .20 

2% for Waste .17 



Total Cost of Material $8.71 



COMPABISON OF ESTIMATE WITH ACTUAL COST 





P. W. Wages 


Cost 
per Hr. 


Est. 


Est. 
Cost 


Actual 


Actual 


' 


Box 


Lid 


Time 
H.M. 


Time 
H.M. 


Cost 


Material 

Carver _ _ 
Single Scorer. _ 
Corner Cutters. 

Staying ... 

Bending 

Lidding Up 


$ 

.40 
.15 


$ 

.40 
.15 
.30 


$ 

.96 
.80 
.60 
.55 
.30 
.30 


2 

4 
3 
2 


15- 
45 


$8.71 
.24 

1.60 
.45 

2.20 
.90 
.60 


1 

3 
4 
3 


10 
45 
30 
30 


$8.71 

.16 

1.40 

.30 

2.03 

1.20 

.90 


Shipping and Delivery 

$10.00 per ton of board 
(1/7 of price @ $70.00) . 


i 


£14.70 
1.15 


Act. 

Cost 


$14.70 
1.15 




Total Est. Cost $15.00 


$15.85 



For Paper Box Manufacturers 



73 



(2) 1,000 Stayed Paper Box and Lid. 
Machine and Strip Top Machine. 



Covered on Stripping 



Box 

9x5x1% 
334 x3% 


9 out 
Boxes 11 
Lids 11 
4 sheets 


Lid 
• like 


1234x8% 

3 3 
Board in 
Board in 
Lining, 22 
Glue 


do 
2 sheets 50 pi 
2 sheets 50 pi 
News @ $0.80 



$70.00 $3.92 

$70.00 3.92 

1.79 

1.00 



50 



2.20 



Stay for Box 1 

Stay for Lids} 13 M. %" Kraft Paper 

Paper for box 150 sheets wglz 20x24 @ $0.45 

" lids 150 " 

" tops 94 " 

" bots. 94 " 

Flies, 2-9" Laces, 1,000 strips .'.. .85 

Labels, 5xiy2, one color .75 

Printing, Flat Bronze 1.25 

Strings and Strips .20 

2% for Waste .32 

Total Cost of Material. - .$16.70 

COMPARISON OF ESTIMATE WITH ACTUAL COST 



P. W. Wages 



Box 



Lid 



Cost 
per Hr 



Est. 
Time 
H. M. 



Est. 
Cost 



Actual 
Time 
H.M. 



Actual 
Cost 



Material 

Carver 

Single Scorer. _ 
Corner Cutters. 
Paper Slitting. _ 

Staying 

Bending 

Lidding Up 

Covering 
Turning In 
Bottom Paper 
Hand Work 

Flying 

Labels 



.40 
.15 



.50 

.50 

1.00 

1.00 

.50 



.40 
.15 
.30 

.50 



.96 
.80 
.60 
.72 
.55 
.30 
.30 

.55 

.40 
.55 
.55 
.55 



15 

45 

30 



30 



30 



Shipping and Delivery 

@ $10.00 per ton of board 
(1/7 of price @ $70.00). 



$16.70 
.24 

1.60 
.45 
.36 

2.20 
.90 
.60 

3.30 
1.00 
2.75 
2.75 
1.38 

$34.23 
1.15 



Total Estimated Cost $35.38 



10 

30 
20 
15 



30 



15 



$16.70 
.16 

1.60 
.30 
.24 

1.65 
.90 
.90 

2.75 
1.00 
2.75 
3.30 
1.25 

$"33750 



1.15 

Act. 
Cost'$34.65 



74 Manual of Cost Engineering and Estimating 

(3) 1,000 Stayed Paper Box and Lid, covered on Stokes 
Smith Machine. 



Box 

9 x 5 x 1 % 

3%x3% 

12^x8% 
3 3 9 out 



Lid 
like 

do 



Board in Boxes 112 sheets 50 pi. @ $70.00 $3.92 

Board in Lids 112 sheets 50 pi. @ $70.00 3.92 

Lining, 224 sheets News @ $0.80 _. 1.79 

Glue 1.00 



13 M. %" Kraft Paper. 



.50 



Stay for Box 
Stay for Lid 

Paper for Box 250 sheets wglz 20 x 26 @ $2.75 { 9 __ 

" Lids 250 " " " " j 

Flies, 2-9" Laces, 1,000 strips .85 

Labels, 5x1%, one color _ .75 

Printing, Flat Bronze 1.25 

String and Strips .20 

2% for Waste .32 



Total Cost of Material $17.25 



COMPARISON OF ESTIMATE WITH ACTUAL COST 



P. w. 


Wages 


Cost 
per Hr. 


Est. 
Time 
H. M. 


Box 


Lid 


$ 


$ 


$ 








.96 




15 






.80 


2 








.60 




45 


.40 


.40 


.55 


4 




.15 


.15 


.30 


3 






.30 


.30 


2 




.50 


.50 


1.25 


4 




.50 




1.20 


2 




.50 ] 




.55 


2 


30 



Est. 
Cost 



Actual 
Time 
H. M. 



Actual 
Cost 



Material 

Carver 

Single Scorer. _ 
Corner Cutters. 

Staying 

Bending 

Lidding Up 

S. & S. Machines 

Flying ..^ 

Labels 



Shipping and Delivery 

@ $10.00 per ton of board 
(1/7 of price @ $70.00)-- 



$17.25 

.24 

1.60 

.45 

2.20 

.90 

.60 

5.00 

2.40 

1.38 

$32.22 



1.15 



Total Estimated Cost.-., __$33.27 





$17.25 


10 


.16 


50 


1.45 


30 


.30 




1.65 




.90 




.60 




6.25 


30 


3.00 


20 


1.27 




$33.10 



1.15 
Act. 
Cost $34.25 



For Paper Box Manufacturers 75 

"These figures are not necessarily an exact rate of costs but 
the figures given are sufficient for the purpose of showing the 
method. The tracer shows how the job proceeds through the 
shop and accumulates the evidence to prove the cost and estab- 
lish the exact facts of the cost of production. 

"It is evident from this illustration that the method of figur- 
ing is not only practical but the system is as near true to facts 
as it is possible to establish; — it is logical, it does not burden the 
lot of boxes with any part of cost which does not apply to it — 
for example, if the box is not covered it only absorbs so much 
of the cost as has been spent on it — there is no part of the 
covering machine added, — if it is not finished, no part of finish 
process is included in the overhead, — if there is no paper used 
then there is no Slitting Machine expense — there is no part of 
the Stokes & Smith Machine Expense spread over the Expense 
Burden if the box is not made on the S. & S. Machine. 

"In these estimates a method of arriving at shipping and 
delivery expense is shown which may be new. We are not pre- 
pared to say it is the best, but it is certainly practical, logical 
and has compensating advantages which will be appreciated. 

"Shipping and delivering can not be calculated by any 
process of time as it bears no relation to the labor cost or cost 
of manufacture, unless you introduce a very complicated system 
or record to tell you how long it takes to deliver each lot of 
boxes. Zone systems have been attempted but they are equally 
unsatisfactory to establish in proportion to the quantity deliv- 
ered. In other words, it costs you just as much to deliver 100 
boxes one mile as it does 1,000, that is if you use the same de- 
livery system for both. When you are taking mixed loads the 
problem becomes still more complex. However, one fact brought 
forcibly to my attention — it costs more to deliver 1,000 large 
boxes than it does to deliver 1,000 small boxes, because frequently 
we had to make two or three deliveries of the large boxes, where- 
as the small boxes only took part of a load. We concluded that 
the cost of handling the Basic Material, board, the cost of storing 
it, the Investment and Insurance Expense, the cost of labor tying 
up and the expense of the Shipping Department in handling the 
boxes after they were made ready for shipping, the expense of 
horse, wagon and delivery all bore a logical relation to the 
amount of board shipped, or sold as boxes. 

"By this method all the cost of handling board and materials 
and all the cost of shipping and delivery is accumulated with 
the cost system netting in Dept. No. 25 and No. 27 and prorated 
in proportion to the tons of board cut up and sold in one year — 
this gives us a charge on cost per ton of board, which, added 



76 Manual of Cost Engineering and Estimating 

to each load of boxes, is a practical estimate of the cost of hand- 
ling the board and shipping and delivery. 

"You will notice its application in the cost sheets shown 
here illustrating the application of the Denham System. This is 
not strictly part of the system but merely illustrates a method 
suggested by the writer of arriving at shipping and delivery ex- 
pense. 

"All the foregoing is respectfully submitted for considera- 
tion and thought and if through this means the Paper Box Mak- 
ing Industry can be helped to awaken to the urgent need of a 
Uniform Estimating and Costfinding Method and to the merit 
of the work which the Joint Cost Committee of the National 
Federation of Paper Box Manufacturers Association is doing, the 
writer will consider this effort not in vain." 

Henry L. Stortz, Secretary. 

It will be seen from the foregoing statements and ex- 
amples that cost accounting consists of the facts of ex- 
pense and production generalized, and manipulated 
through purely theoretical makeshift methods. Not a 
single theory offered by the authorities on cost account- 
ing will stand analysis. 

Confronted by a demand for information about cost 
of production, but without the necessary technical knowl- 
edge of processes, accountants generally have assumed 
that the expenses of production could be grouped into 
three great divisions, material — direct labor — overhead. 
They hold that the proportions of these generalized di- 
visions found in the business of one year could be used 
during the next as a basis for making prices, and that the 
proportion of the overhead to one or both of the other 
groups, found in the total volume of product for the 
period, was constant throughout the individual items of 
which the total was composed. 

The slightest effort in the direction of analysis will 
cause the manufacturer to lose confidence in the cost ac- 
counting theories. All of the facts of experience prove 
them unsound. 

Visible evidence of the absence of relation between 
the amount of wages paid to the worker and the cost of 
the various operations involved in the manufacture of 



For Paper Box Manufacturers 77 

paper boxes, is shown in the table and chart presented 
herewith. 

In preparing this data for graphic illustration the 
operations have been arranged according to the amount 
of wages paid per hour beginning with the lowest. This 
gives a better opportunity for comparison than would be 
the case if presented in the order of the cost system plan. 

The figures shown in the table include the hours of 
each operation chargeable to orders during the period 
covered. These could not readily be illustrated on the 
chart. 

TABLE SHOWING LACK OF RELATION BETWEEN DIRECT 

LABOR AND OTHER EXPENSES 
Compiled from Actual Experience, "Overhead" 167% on wages. 

Result Actual 

Process Hours Wage by % Cost 

1 Finger Hole Machine 41 .11 .29 .41 

2 Topper 551 .12 .32 .31 

3 Stripper (2) 430 .12 .32 .32 

4 Girls' Table Work 3270 .12 .32 .31 

5 Stayer (3) 175 .12 .32 .38 

6 Stayer (2) 145 .13 .35 .40 

7 Stayer (1) 946 .14 .37 .36 

8 Sheet Cutter 101 .14 .37 .44 

9 Stripper (1) 1781 .14 .37 .37 

10 Lacing Machine 57 .14 .37 .59 

11 Double Corner Cutter 371 .15 .40 .44 

12 Extens. Edge Mach. (2) 205 .15 .40 .45 

13 Metal Edge Stayer 23 .15 .40 .55 

14 Liner 551 .17 .45 .53 

15 Single Corner Cutter 120 .17 .45 .44 

16 Chopper Saw 17 .17 .45 .74 

17 S. & S. Wrapping Machine_1218 .17 .45 .74 

18 Extens. Edge Mach. (1) 43 .18 .48 .68 

19 Doming Mach. 63 .21 .56 .67 

20 Paper Slitter 142 .22 .59 .57 

21 Double Scorer 453 .22 .59 .57 

22 Seybold Cutter 301 .25 .67 .68 

23 Shears, Men's Hand Wk 56 .25 .67 .62 

24 Quadruple Stayer 116 .25 .67 .89 

25 Double Ender 7 .25 .67 .96 

26 Single Scorer 641 .26 .69 .54 

27 Single Ender 182 .29 .77 .71 



78 Manual of Cost Engineering and Estimating 



CHART SHOWING LACK OF RELATION BETWEEN DIRECT 
LABOR AND OTHER EXPENSES 

(See chart on next page.) 

Description of Chart — The light continuous line shows the 
amount of wages paid per productive or chargeable hour of the 
processes included. 

The heavy continuous line shows the actual cost of the vari- 
ous operations or processes as determined by the use of a Cost 
Engineering system. 

The dotted line indicates the theoretical cost of the processes, 
found under the cost accounting method most commonly used — 
the addition of overhead to direct wages by percentage. The 
percentage found by comparing the total of other operating ex- 
penses with the payroll of the period was 167. 

The numbers at the top of the chart correspond with the 
numbers of the processes given in the table. 

Incidentally this example illustrates how much stronger the 
variations in figures appear when shown by graphic chart than 
when figures only are given. 

Graphic charts may be used by the management to keep 
themselves informed as to the fluctuations in both the volume of 
product and the cost per unit. 



For Paper Box Manufacturers 



79 



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95 
90 
85 
80 
















































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70 
65 
60 
55 

50 
45 
40 
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• Actual Cost- 



80 Manual of Cost Engineering and Estimating 

Cost Engineering has been developed to overcome all 
of the weaknesses of cost accounting, and differs from it 
in every essential feature. 

Cost Engineering permits no generalization of either 
expenses or product. It considers every expenditure in- 
cident to manufacture as definite in amount, purpose, and 
benefit. It insists that expenses shall be charged to in- 
dividual items of product only in the proportions to 
which they have been benefited by such items. 

Cost Engineering in its entirety, is a symmetrical 
structure, balanced in every part. It requires the reader 
to take nothing for granted, but demands proof at every 
step. Persons who lack a clear understanding of its prin- 
ciples, or who are inexperienced in their application, 
sometimes believe that they can develop results more to 
their liking by combining part of the practices of cost ac- 
countants with those of the cost engineer, or by injecting 
their own arbitrary opinions into the operation of the 
system. Such efforts invariably cause confusion, dis- 
satisfaction, and financial loss, whereas the system is de- 
signed to increase profits. 

Since the object of this book is largely to introduce 
the subject of Cost Engineering to the paper box manu- 
facturer, to explain its functions, and the advantages of 
its adoption throughout the industry, several chapters will 
be devoted to detailed descriptions of methods and usages. 

In undertaking the study of this science the reader 
should endeavor to clear from his mind the ideas which 
have been developed through familiarity with cost ac- 
counting. He will make a serious mistake if he assumes 
that he can patch up his present information with a few 
new ideas to be picked up from a hasty observation of 
Cost Engineering practices. He must not assume, that 
because the procedure of getting initial data is similar to 
that frequently used by cost accountants, it follows that 
Ihe data is to be treated in the same way. He is urged to 
approach the subject without prejudice, keeping his mind 



For Paper Box Manufacturers 81 

open for the purpose of getting the proper perspective of 
the whole subject, and thereby grasping fully the ideas 
which the author intends to convey. 

The true student of Cost Engineering will look upon 
this science exactly as he would look upon the science of 
mathematics or chemistry. He will study it to get the ad- 
vantages offered for his use, and not attempt to change 
it about in an effort to make it show results which are 
at variance with the facts of experience. In the long run 
such efforts have the effect of fooling himself only. 



Efficiency consists in obtaining practical re- 
sults without either waste or strain in the 
use of time, energy and material. Strenu- 
ousness is opposed to efficiency. The degree 
of perfection required for practicability, 
and not perfection itself, is the measure of 
quality. Effort that does not fully serve its 
purpose is inefficient. A thing done right 
is done forever. 



CHAPTER SIX 

Importance of Time Factor in Cost Engineering 

Definition of Term "Time" — Product a Combination of Ma- 
terial and Process Time Items — Wages Paid for Personal Time — 
Piecework Rates Have Time Basis — Machine Time — Manual or 
Personal Time — All Expenses of Factory Operation Related to 
Time — Time Reports More Profitable for Cost Work than for Pur- 
pose of Espionage — Chargeable Time — Time is Money, a Truism 
in Cost Determination — The Manufacturer a Dealer in Time as 
Well as Material — Object of Effort — Profits Not Production — 
Functions of Time Report — Time Report a Vital Factory Record. 

The time element is of prime importance to the hu- 
man animal. Of no other creature is this true. Shake- 
speare says : "Time's the stuff life is made of." Pitman, 
who developed shorthand, used as his slogan "To save 
time is to lengthen life." We frequently hear the expres- 
sion "Life is too short," and are told that, because of the 
rapid means of travel at our command, and the progress 
made in labor-saving inventions, we live more now in a 
decade than our forefathers did in a century. 

In manufacture, the most important element is time. 
The value of the material is rarely as great as the value of 
the time required to form it into the finished articles of 
commerce. 

Under cost accounting the term "time" has generally 
been confused with the amount of the wages paid for pro- 
duction, especially when the wages were based upon 
time. The workman calls for his "time," when in reality 
he demands his wages. 

Manufacturers speak of "the cost of time and ma- 
terial," when they mean the expenses of wages and ma- 
terial. The cost of process time is generally unknown 
to the manufacturer, though the amount of wages paid for 
personal time is easily ascertainable, hence the confusion 
of terms. 

Items of manufactured product are composed en- 
tirely of material and time. The article does not consist 



84 Manual of Cost Engineering and Estimating 

of material alone. The identity of the article is not in- 
dicated wholly by the material entering into it. Wool is 
not cloth, but woolen cloth is wool plus the time of such 
operations as sorting, carding, spinning, and weaving. 
The time applied of other processes determines the char- 
acter of the cloth. Cloth is not clothing, until the time of 
garment-making operations has been applied. 

The finished product of one set of operations becomes 
the raw material for another set. The time and nature 
of the operations applied determine the character of the 
finished article. 

Straw, the by-product of the farmer, becomes the raw 
material of the board-mill. When a series of operations 
has been applied it becomes the finished article of com- 
merce known as "strawboard." This in turn becomes 
the raw material of the box factory. When it has been 
scored, cornered, set up, stayed, or covered and trimmed, 
it becomes the finished box, required by the maker of 
candy or other manufactured goods. In his hands it 
meets another stream of the product of other operations 
of combining material with the time of other processes. 
These together meet the product of the packing case 
manufacturer, which is the result of still other combina- 
tions of time and material. Finally it is ready for ship- 
ment to the consumer. 

The straw of the field could not become the finished 
box, the sap of the sugar cane could not become candy, 
nor could the tree of the forest have become the pack- 
ing case except by the application of time of processes to 
the materials in transforming them from their raw state 
through successive stages or operations into the finished 
articles. 

Wages are paid for personal time. Piecework rates 
are simply another form of computation of the wages of 
personal time. They are determined by dividing the 
number of pieces processed in a day, by a reasonably ef- 
ficient worker, into a fair day's earnings for an employee 
Of that grade. 



For Paper Box Manufacturers 85 

Process time is frequently not synonymous with per- 
sonal time. In some kinds of production one person can 
attend several, say five active machines. In that case the 
wages of the person for one hour are applicable to five 
process hours; or, a machine may require five people to 
attend it, thereby requiring that the wages of five per- 
sonal hours must be carried on one machine or process 
hour. 

Time, in Cost Engineering, refers to process time un- 
less it is expressly mentioned as personal time. Process 
hours may be either the time of an individual or a 
machine, according to the nature of the process. 

If the process is a machine process, i. e., if the 
machine is set to guides or measurements so that the per- 
sonal element consists in feeding or other effort which 
may be considered as operating the machine rather than 
providing the skill, the hour of the machine becomes the 
unit of time measure for that process. 

If, on the other hand, the work is such that the skill 
depends upon the human element, the process is consid- 
ered as "manual," and the personal hour becomes the 
unit of process time. 

In the paper box industry, machine processes may be 
represented by such items as lining, scoring, cornering, 
staying, slitting, etc. A machine hour may involve the 
time of several persons, as in the case of a Stokes & Smith 
covering machine. Manual or personal processes may be 
represented by stripping, trimming, or other effort, where 
the equipment is in the nature of tools instead of 
machinery, and the speed and quality of the output de- 
pends upon the individual employee. 

Some processes are the result of either machine or 
manual effort, according to the method employed in the 
factory under consideration. Covering may be done by 
hand, or by machine, as may also labeling, lacing, etc. In 
such instances the words "hand" or "machine" should be 
used in connection with the name of the process wher- 
ever necessary to designate the method employed. 



86 Manual of Cost Engineering and Estimating 

Timekeeping is an essential step in Cost Engineering. 
In this it differs from cost accounting. In the latter 
method timekeeping is not considered as necessary on 
processes wherein the wages of the operator or workman 
are computed on the basis of pieces. 

However, since we have shown that wages are not a 
basis for the distribution of any other expenses, we must 
abandon that theory and adopt a practical method. 

Analysis will demonstrate that every expense of op- 
eration is related to the element of time. 

Rent is paid on the basis of time. 

. Depreciation is calculated on a basis of the length of 
time that a machine may be expected to give efficient 
service. 

Insurance premiums are payable on a time basis. 

Interest is calculated and paid on the basis of time. 

Taxes on investment are paid on the basis of time. 

Power is calculated on the basis of consumption in 
its relation to time of operation. 

Supplies required by processes increase or decrease 
relatively to the hours that the process is active. 

The Superintendent's attention is required for time 
of active processes only. He need not supervise idle 
equipment. 

The foremen or foreladies are responsible for the use 
of the time of both productive and so-called non-produc- 
tive workers in their departments. 

Wages are paid on a time basis, or through piece- 
work rates set on the basis of time. 

So we might follow the time element throughout a 
long list of minor items of expense. 

Timekeeping means more than payroll records. 

The time report must show the amount of time spent 
on each order. If it covers a machine operation it should 
show the time that the machine was running on the cus- 
tomer's orders, and the number of pieces produced on 



For Paper Box Manufacturers 87 

each, the time required for setting, the time for repairs, or 
that required for cleaning the machine. It must also show 
the amount of time that the machine was idle. 

If the report covers personal time, it should show the 
time spent on each customer's order, and the number of 
pieces produced. It must account for the waiting time be- 
tween orders, and for any other items of personal time 
not directly chargeable to the customers. 

The time-worker must keep a record of pieces for use 
in making estimates and developing efficient methods. 
The pieceworkers must keep time as well as pieces, for 
the purpose of providing a basis of charging expenses 
other than wages, and also that cost may be properly de- 
termined. 

The time report is the fundamental record of a fac- 
tory. Employer and employee alike should understand 
that there is a direct relation between the efficiency with 
which these records are made and the profitableness of 
the business. 

The greater part of the value of the product of the 
factory is made up of time units. Carelessness in keeping 
the records or in handling them is certain to result in 
losses. 

The time report in the factory is identical in import- 
ance with the charge sales slip in a department store. It 
is the record of the items chargeable to individual cus- 
tomers, the only means by which the manufacturer may 
know just what his employees have put into the custom- 
ers' orders. Carelessness in handling these vital records 
will create greater losses than those caused by slow 
workmen. 

Time reports were originally introduced as a means 
of keeping a check on the employee — as a faultfinding de- 
vice. Their value as a profit-making and costfinding 
device far exceeds their value from the old standpoint. 

Every item of chargeable time not charged to the 
customers represents its face value in net loss. The pro- 



88 Manual of Cost Engineering and Estimating 

prietor or official of a factory who is too proud to make 
out a report for such time as he works on chargeable 
processes is in the same position as the proprietor of a 
store who hands goods over the counter to charge cus- 
tomers and is too conceited to make a charge slip lest he 
lower himself to the level of a clerk. To be a clerk is 
more honorable than to be a fool. 

One of the chief reasons that mechanics so often fail 
when advanced to managerial or executive positions is the 
fact that they have had an erroneous idea as to compara- 
tive duties. They also lack the business training that 
teaches the value of small things. 

Little leaks will sink the ship, and little losses cause 
business failure. In the aggregate they mount up to large 
sums. Great transportation profits are built up on the 
margins of five-cent fares. The highest building in the 
world was built on the profits from five- and ten-cent 
sales. 

In no sense is it more true that "time is money" than 
in a manufacturing business. The manufacturer is in a 
large measure a dealer in time as much as the dry goods 
merchant is a dealer in cloth. The hours of manufactur- 
ing processes have different values, according to their 
composition, exactly as the yards of various kinds of cloth 
have different values according to their composition. 

Some time ago the superintendent of a large eastern 
factory showed a disposition to discourage rather than 
cooperate in the installation of the cost system which his 
concern had ordered. The cost engineer asked him why 
he opposed the introduction of the system. He replied : 
"Our workmen are here to get out the product, hot to 
keep books." The engineer went back at him with 
"You are wrong. Your workmen are here to make profits 
for your company. What object is there in getting out 
product except to make profits? How will you be sure of 
profits if you do not know the cost of the product?" The 
superintendent admitted the new viewpoint was correct. 



For Paper Box Manufacturers 89 

He became a supporter of the cost system and today says 
that he could not run the factory without it. 

Time reports have many uses. They help the fore- 
men; they offer a multitude of eyes to the superintendent; 
they help, as well as check, the estimator; they serve as a 
charge slip, as a guide to more efficient methods. They 
prevent leaks and they help to increase profits. We refer 
to efficiently planned, properly installed, and diligently 
used time reports, not the incomplete, poorly kept, care- 
lessly handled, and misused sheets which clutter up the 
offices of many concerns. There the only use for them 
seems to be as an excuse for the statement, "We have a 
cost system of our own, and are not interested in chang- 
ing it at present." 

A time report is a vital record in a factory, but it is 
not a cost system. 



The Law of Equal Reaction was first stated 
by Sir Isaac Newton. Its application to 
mechanics has long been taught in every 
school. The pendulum, the lever, the bow 
and arrow, are simple illustrations of this 
Nature's Greatest Law. It applies not only 
to mechanics, but to economics, hygiene, 
and all human relations. Briefly, it means 
that every act, word, and thought has a re- 
action, either beneficial or harmful, and 
this reaction is equal to and of the same 
character as the act itself. This explains 
why work reacts as strength, and laziness 
reacts as weakness; why kindness reacts as 
kindness and abuse reacts as abuse; and 
why honesty, trust, and other good traits 
can be developed in others by "example." 
It is usually applied in connection with the 
Theory of Averages, and explains why the 
man who overworks is forced, through sick- 
ness, to rest; why periods of corruption al- 
ternate with waves of reform; why panics 
follow periods of abnormal prosperity; and 
finally, why war and peace come one after 
the other. — Roger W. Babson. 



CHAPTER SEVEN 
Practical Application of Average Rates 

Purpose of Cost System — Unchangeable Nature of Cost of 
Completed Product — Variation in Product and Demand — Stability 
of Price Desirable — Peculiar Requirements of Men Who Are 
Habitually Careless — System Must be Practical Under All Condi- 
tions — The Limitations of the Law of Averages — The Use of 
Averages in Costfinding — Averaging Volume of Product — Averag- 
ing Expense per Unit of Product to Determine Cost Rates — Periods 
over Which Averages Should be Made — Comparison of Monthly 
and Yearly Averages — High Hourly Rates Not Indication of High 
Production Cost. 

Elsewhere the author has defined the cost of an item 
of product as the sum of the expenses involved in its pro- 
duction, and has declared it to be definite in amount. The 
purpose of a cost system is to determine what is that 
definite amount. 

Cost is the result of conditions. The cost of an item 
cannot be changed after it has been produced. The cost 
of future similar items can be influenced only by a change 
in conditions. 

Suppose a factory was built to produce one single 
item, and was then dismantled. The cost of that item 
would necessarily involve every cent of expense in con- 
nection with the construction, operation and dismantling 
of the factory, and such other acts as were necessary, up 
to the point where the money provided had been returned 
to those who had provided it. 

Factories are rarely built for such a purpose. They 
are generally designed for continuous production. A few 
manufacture a product so uniform, and in such demand, 
that they can be operated constantly at a uniform rate of 
output. The actual cost of each item may be said to be 
uniform with every other item. But this is not true of the 
paper box factories which have come under the author's 
observation. 

The consumers of paper boxes have many require- 
ments, and boxes must be made to the consumer's specifi- 



92 Manual of Cost Engineering and Estimating 



CHART SHOWING RECORD OF MONTHLY AVERAGE COST PER 
HOUR FOR OPERATING DOURLE SCORING MACHINES 



* * < » 






110 
100 

95 

90 

85 

80 

75 

70 

65 

60 Y 

55 



50 



















































Cost of Operating 
Group of 

DOUBLE SCORING MACHINES 
By Months and 














/ 

/ 


1 
















/ 
/ 


I 
I 

4 — 
\ 
\ 




A 


veraj 


jed J 


} to 


12 U 


onth 


s 














/ 


\ 
\ 

— r 
t 


/ 




























/ 


\ 


/ 




\ 
\ 






















/ 
































/ 

/ 

/ 




1 






\ 


J 
/ 




\ 










1 




/ 
/ 
/ 












\ 

\ 


1 
1 




\ 
\ 










\ 




/ ^ 












\ 


1 




\ 


\ 








\ 


^ ■ 






















\ 
s 
\ 


s 





Range of Monthly Averages, 51 to 99, or 48 cents. 

Range of Charging Averages, 2 to 12 months, 58 to 67, or 9 

cents. 
Range of 12 Months' Averages, 63 to 67, or 4 cents. 



For Paper Box Manufacturers 93 

cations. The businesses of the users of boxes are sea- 
sonal, therefore the demand for boxes is irregular. The 
variety and specific requirements make it rarely possible 
to build up a stock in the dull season to meet the demand 
of the busy season. These conditions must be taken into 
consideration in any plan of costfinding for the paper box 
industry. 

The lack of definite understanding as to what consti- 
tutes a cost system is very general among manufacturers. 
It is the cause of much controversy and many peculiar 
conceptions. 

In a serious conversation one manufacturer told the 
author the kind of a cost system which he wanted. It 
would show the difference in the cost of an order where 
the stockkeeper brought the board on his truck directly 
from the car, which was unusual, as compared to the ordi- 
nary case where it was first stacked on the stockroom floor 
and reloaded on the truck as needed. 

Another manufacturer wanted the system to show 
the difference in cost caused by two workmen spending 
a few minutes in an argument over the best method of 
doing a given piece of work. 

Since the first instance was an unusual exception to 
the practical routine, and would not be adopted as a cus- 
tom for economy, it could have no value. The second in- 
stance was a cause for congratulation. While there may 
have been a momentary delay, the disposition on the part 
of the workmen to work out the best methods might easily 
prove a saving rather than a loss and is worthy of en- 
couragement. 

It is hardly necessary to say that neither of these 
manufacturers had anything which resembled a cost sys- 
tem. Deciding to consider a means of finding cost they 
felt that they could not accept anything short of a degree 
of refinement which would be impractical and unprofit- 
able in operation. While considering any degree of re- 
finement in a cost system, it is always advisable to com- 
pare the value of the result with the cost of the effort 



94 Manual of Cost Engineering and Estimating 



CHART SHOWING RECORD OF MONTHLY AVERAGE COST PER 
HOUR FOR OPERATING SINGLE STAYING MACHINES 



Eh S 



65 



60 



55 



50 



45 



40 



35 

















































1 

1 


i 

\ 
\ 






























1 
1 


\ 
\ 


























t 
I 


\ 


1 
1 
1 


\ 
V 


























I 
I 
1 


\ 
\ 
\ 


1 
1 
1 


\ 

1 


V 






















/ 


( 


\ 


1 




\ 
\ 
\ 


/ 




A_ 








^ 








/ 






-"* 




< 


r<— 




\ 
\ 

1 


.^ 






- 




f 


























Cost of Operating 
Group of 

SINGLE STAYING MACHINES 

By Months and 
Averaged 2 to 12 Months 



















































































Range of Monthly Averages, 33 to 65, or 32 cents. 

Range of Charging Averages, 2 to 12 months, 34 to 40, or 6 

cents. 
12 Months' Averages, no variation. 



For Paper Box Manufacturers 95 

necessary to obtain it. The author believes that if the cost 
of the effort absorbs the gain, it is unprofitable and not 
worthy of adoption. 

Paper box factories must be operated continuously 
throughout dull seasons as well as busy seasons. Every 
day some new contingency arises. The kind of a system 
adopted must therefore be one which will prove practical 
under all of the conditions. 

In dull seasons the relation between fixed or semi- 
fixed expenses and the volume of the output causes a very 
serious rise in the cost per unit. This is due to the smaller 
number of units of product as against a nearly constant 
amount of expenses. 

In busy seasons the reverse is true. The cost per unit 
decreases with the increase in number of units. If the 
cost of the product at the moment of production is used as 
a basis for selling, the prices would necessarily rise at the 
dull season and fall in the busy season. The need of more 
business at the dull season usually tempts the producer to 
decrease his price at the very time when costs are highest. 
When the season of demand arrives, and the cost is low- 
est, the customer is usually willing to pay a higher price 
for the sake of prompt service. 

Buyers who are making continuous purchases usually 
form an opinion from past experience as to what a cer- 
tain kind of box should cost them. Variable prices are 
detrimental. The man who has once purchased an item 
at a low price dislikes to pay a higher price at a later date, 
regardless of the reason for the change. 

The manufacturer who in the dull season takes orders 
at less than a normal price for the purpose of keeping his 
factory busy simply courts trouble for himself when the 
buyer wishes his order duplicated in the busy season. If 
he explains why he made the low price he either starts the 
customer out scouting for a dull plant, or causes him to 
arrange his purchases for the dull season, thus spoiling a 
customer who otherwise could be profitably retained. 



96 



Manual of Cost Engineering and Estimating 



CHART SHOWING RECORD OF MONTHLY AVERAGE COST PER 
HOUR FOR OPERATING QUADRUPLE STAYING MACHINE 



280 
270 
260 
250 
240 
230 
220 
210 
200 
190 
180 
170 
160 
150 
140, 
130 
120 
110 
100 
90 
80 
70 



M < S 

























■ 
1 












Cost of Operating 




1 
1 

I 


1 














1 










Group of 






I 










QUADRUPLE STAYING MACHINES 
By Months and 


















1 


l 












A 


vera; 


jed i 


I to 


12 IJ 


onth 


s 








i 

T 

I 
1 

H 
































1 




— 


l 
/ 
































l 

.X 

/ 
















; 

/ 


\ 
\ 


























L 

1 


\ 


1 

— h 
i 
l 

— /—i 
/ 


I 

A — 
» 

\ 

— *— 








1 
1 
1 
1 
1 






—r 












1 
—h 
i 
1 


\ 

\ 
\ 
\ 


/ 

-i — 
/ 

/ 


\ 
\ 
\ 
\ 






1 1 


1 
1 






-4 — 












1 


\ 


/ 






1 












/ 


i 








1 


\ 
\ 


; 




\ 


i 












/ 
/ 


\ 








1 


\ 
\ 


! 




\ 
\ 


l 












/ 











1 








s\ 












i 


/ 


M 


/ 














\> 














1 


^L 


■/ 














\ 










- 


i 




v> 


— i — 














\ 








k N 










/ 

/ 














\ 


i 






N 


/ 








' 
















i 
I 













Range of Monthly Averages, 71 to $2.80, or $2.09. 

Range of Charging Averages, 2 to 12 months, 89 to $1.01, or 

12 cents. 
Range of 12 Months' Averages, 94 to $1.01, or 7 cents. 



For Paper Box Manufacturers 97 

Whether costs are high or low, stable or variable, de- 
pends entirely upon conditions. Cost is the result of con- 
ditions and can be changed only by a change in condi- 
tions. 

The ideal conditions for costfinding and pricemaking 
may be said to consist of a uniform product, a uniform de- 
mand, and uniform expenses. Under such conditions 
selling prices would be uniform, yielding a uniform rate 
of profit. 

We cannot control conditions to an extent which will 
bring about a set of conditions such as those described. 
We can, however, by proper consideration of seasons and 
expenses secure a result which will closely approximate 
the desired control. This is done through the segregation 
of elements having the same characteristics and then de- 
veloping averages. 

It is not uncommon to hear thoughtless persons re- 
mark that "you can average any set of figures." Liter- 
ally this may be true but unless the items represented by 
the figures are carefully classified the result of the act of 
averaging would be worthless. What would be the sense 
of getting either the average, price, weight, or space oc- 
cupied by a barrel of flour, fifty gallons of water, seventy 
pounds of lard, and three dozen yeast cakes, all of which 
might be consumed in the processes of baking bread. 

The foregoing grouping seems ridiculous, but it is not 
more so than the common practice of cost accountants. 
They take a large number of unrelated elemental ex- 
penses, combine them in a single account and undertake 
to average them over the wages of workmen engaged on 
dissimilar processes of manufacture which are applied in 
extremely variable degrees to an infinite variety of items. 

However intelligent these men may be from other 
standpoints, such methods in connection with manufac- 
turing processes arise from but one cause — ignorance. 

Cost Engineering undertakes costfinding through the 
methods of classification of averageable items, the count- 



98 Manual of Cost Engineering and Estimating 



CHART SHOWING RECORD OF MONTHLY AVERAGE COST PER 
HOUR FOR OPERATING STRIPPING MACHINES 



OJ H CO C5 
CO CO OJ .-I 
*l ,H rH CO 



OJ 00 rH 



h S 



a ,2 



<i 05 













































/ 
I 


: 
\ 






























1 
I 
1 


V 

\ 
V 

\ 






\ 


/ 












^' 


\ 


/ 


\ 

s 


jr*' 


I 


\ 


y 










\ 








\ 


* 




» 








■ — * 


»*"" 


< 


/ 










* 














Cost of Operating Group of 

STRIPPING MACHINES 

By Months and 

Averaged 2 to 12 Months 














>-'.' 


■--■ 





















































Range of Monthly Averages, 32 to 54, or 22 cents. 

Range of Charging Averages, 2 to 12 months, 39 to 43, or 4 

cents. 
Range of 12 Months' Averages, 40 to 43, or 3 cents. 



For Paper Box Manufacturers 99 

ing, weighing or measuring of the elements required by 
processes, the charging of each with the amount paid for 
the elements at uniform rates. 

It approximates the ideal condition by dividing the 
factory into processing divisions, or sub-factories, which 
produce uniform units. Each of these sub-factories, be- 
ing charged individually with such expenses as are justly 
incurred on its account, in turn charges a uniform amount 
of the total of its expenses against each of the uniform 
units produced. Since the amount chargeable per unit is 
determined by dividing the total of the expenses incurred 
in a given period by the number of units produced in the 
coincident period, the result is termed an average rate 
for that process. 

Great care must be taken in planning a system to 
avoid elaborateness, or detail out of proportion to the re- 
quirements. The engineer must be equally careful not to 
combine, for the purpose of obtaining average rates, two 
or more processes which are not properly averageable. 
Further attention will be given this subject in succeeding 
chapters. 

The fluctuating volume of product from period to 
period, as against a more or less constant amount of ex- 
penses, creates a corresponding fluctuation of rates at the 
busy and dull periods or seasons. These fluctuations are 
usually found to occur at approximately the same each 
year. The result is that if the expenses for any given 
processing division throughout the year are combined, 
and the total divided by the units of product for the year, 
an average cost per unit will be obtained which can safely 
be used as a charging rate for determining the cost of the 
product of such division entering into a given order. It 
follows that the total amount charged for the units pro- 
duced in a year must equal the expense of producing the 
units. 

As volume and expense are both affected by eco- 
nomic and political conditions it would still be unsafe 



100 Manual of Cost Engineering and Estimating 



CHART SHOWING RECORD OF MONTHLY AVERAGE COST PER 
HOUR FOR OPERATING STOKES & SMITH WRAPPING 

MACHINES 



r-l tH t- 



fc n 



< M 






115 

110 

105 

100 

95 

90 

85 

80 

75 

70 

65 

60 



















































Cost of Operating 
Group of 














I 


\ 
















1 


\ 




S. & S. WRAPPING MACHINES 
















\ 




By Months and 
Averaged 2 to 12 Months 














i 
1 


\ 
\ 
\ 
















1 
l 


\ 










t 










1 

1 


1 








1 












/ 
/ 


\ 
\ 








1 


















\ 




/ 


\ 








■ / 
1 
1 

1 








1 
1 










\ 
\ 
\ 


; 
/ 


/ 


\ 
\ 
\ 








1 
1 








1 










— *f— 


I — +-* 
I 












1 








1 










\ 


1 




\ 










l\ 






1 . 










\ 


i 




\ 
\ 










1 ' 


^1 






























\ 

\ 


/ 
/ 






















\ 


/ 


\ 




\ 


























/ 


\ 




































1 


1 


























\ 
\ 

\ 



































Range of Monthly Averages, 65 to $1.11, or 46 cents. 

Range of Charging Averages, 2 to 12 months, 76 to 85, or 9 

cents. 
Range of 12 Months' Averages, 82 to 85, or 3 cents. 



For Paper Box Manufacturers 101 

to use this annual average rate continuously without a 
means of correcting it. 

For practical results, and in order that the manage- 
ment may keep in constant touch with the conditions in 
the factory, the expenses and production units should be 
summarized monthly, thus obtaining a monthly average 
rate for comparative purposes. 

The yearly average is then easily corrected by adding 
to the totals of the preceding twelve months the expense 
and units of the new month, deducting the expenses and 
units of the corresponding month of the preceding year, 
and dividing the new total of expense by the new total of 
units. 

When this is done it will be seen that the yearly aver- 
age rate rarely changes more than one cent from month 
to month. The greatest fluctuation will be found on the 
operations which are operated irregularly. 

To fully illustrate the variation which occurs from 
month to month, and the amount which this fluctuation is 
reduced under the plan explained of determining a new 
yearly average each month, the author has secured per- 
mission to use the actual figures produced in the experi- 
ence of a well managed paper box factory during the first 
seventeen months of the use of a cost engineering system. 

In the several charts shown the number of hours 
of product chargeable to orders is given in connection 
with the name of the month. It will thus be seen to what 
extent the cost is influenced by volume of business. Note 
also that after the first twelve months, although the month- 
ly fluctuation continues, the yearly fluctuation is far less. 

There is a common impression that high hourly rates 
indicate high production costs. There is no foundation 
in fact for such an assumption. Skilled workers at high 
wages, with the best equipment and management, are 
likely to develop a high hourly rate, but that combination 
can usually be depended upon to produce a much larger 
volume of output. Very frequently high hourly rates are 
coexistent with low cost of product. It is the relation of 
expense to output that is really important. 



102 Manual of Cost Engineering and Estimating 



CHART SHOWING RECORD OF MONTHLY AVERAGE COST PER 
HOUR FOR GIRLS ON TABLE WORK 



Augr. 
Sept. 
Oct. 
Nov. 
Dec. 


Feb. 
Mar. 
Apr. 
May 
June 
July 
Aug;. 
Sept 
Oct. 
Nov. 
Dec. 


50 
45 
40 
35 


• 










































/ 


, 






























i 
i 
i 


\ 
\ 
\ 




























* 


i 


\ 
\ 


/ 
/ 




\ 
\ 
\ 














._- 






y 


















\ 








"0 




---"" 




N 

\ 




25 




N > 




f 
























s 


20 
15 
10 




CoBt of Operating Group of 

GIRLS AT HAND OR TABLE WORK 

By Months and 

Averaged 8 to 13 Months 





































































Range of Monthly Averages, 26 to 47, or 21 cents. 

Range of Charging Averages, 2 to 12 months, 29 to 34, or 5 cents. 

Range of 12 Months' Averages, 33 to 34, or 1 cent. 



CHAPTER EIGHT 

The Compilation and Use of Production Records 

How Manufacturers Fool Themselves with Display of Figures 
— Whose Business Is It? — Vital Nature of Facts — Mistaking Error 
for Truth — Tendency of the Thoughtless to Follow Traditions — 
System and Red Tape — Scope of Cost System — Demand for Ad- 
vance Estimates — Necessity for Production and Cost Records as 
Basis of Estimates — Records as a Means of Setting Standards — 
Inadequacy of Delayed Information — Outline of Practical Record 
— Uses of the Production Record — Machine Builders' Capacity 
Rating Compared to Actual Average Performance — Records 
Worthless Unless Used. 

Many manufacturers console themselves, and try to 
fool others, by a display of figures, which they either know- 
ingly or ignorantly miscall a cost system. Often when a 
cost engineer, or any one else who has had practical ex- 
perience with cost engineering systems, informs the in- 
dividual that the data which he calls a cost system is mis- 
leading or inconclusive, he is told that "As long as I am 
satisfied and willing to take the consequences, it is no- 
body's business but my own." 

Such is not the case. .It is the business of the stock- 
holder whose capital and income are placed in jeopardy 
through weak business methods; it is the business of the 
creditor who risks his money in the account against the in- 
different manufacturer; it is the business of the competi- 
tor who is obliged to meet the competition of the ignorant; 
it is the business of the family who are dependent upon 
him for support; it is the business of the employee whose 
future welfare is bound up with that of the employer; it 
is the business of the government which has the right to 
depend upon him as a source of revenue and to whose 
interest it is to develop conditions which will insure to 
all of its citizens the highest degree of prosperity. 

In fact, the fabric of humanity is so closely and deli- 
cately interwoven that the failure of one individual to 
recognize his responsibilities affects adversely the welfare 
of hundreds, and often thousands of his fellows. 



104 Manual of Cost Engineering and Estimating 

The facts of business, the facts of cost, the facts of 
production, and the facts of profits, are the vital things. 
The man who indolently disregards them or their warn- 
ings, consoling himself with incomplete information and 
inaccurate figures, is the man who will lose in the test that 
is bound to come sooner or later with the depressing 
periods which alternate with those of prosperity. 

There is in human nature a tendency to become blind 
to the things with which we are familiar. Things that 
once grated harshly on our sensibilities no longer annoy 
us because we have become accustomed to them through 
long association. 

We get wrong impressions at times. Unless our at- 
tention is drawn to them by some compelling force, we 
assume that error is truth. 

In the paper box industry there are men who have 
entirely erroneous ideas of the effect which the introduc- 
tion of modern machinery has had upon the cost of pro- 
ducing boxes. They are following traditional ideas 
taught to them in the days of their apprenticeship. 

They think of expense in terms of wages and ma- 
terial. They measure their success by the amount of 
hustle and worry they have to get orders and fill them. 
Volume is the big thing in their minds. Profits is an item 
which they are content to think of only in connection with 
the statement at the end of the year. If they fear they 
have had a bad year there will probably be no statement. 
Their competitors are blamed for all of their troubles. 
Their factories are filled with inefficient men. Their 
machinery is inadequate or in poor condition. Stocks are 
ill kept and run down. Orders are rarely out on time. 
Their desks are littered with old letters, unopened trade 
journals and unpaid bills. Because they are busy men 
they think they are business men. 

Talk to them of system and they sneeringly tell you 
that all system is "red tape." Offer them a service which 
will help them and they are insulted. Ask them if they 



For Paper Box Manufacturers 105 

know the cost of making paper boxes and they expose 
their ignorance by their "cocksureness." Ask them about 
output and they will tell you that they have the best 
machinery and the most efficient men in the trade. Ask 
for definite figures and they will invariably give you 
round numbers which always means guesswork. They 
try to create an impression of being informed by belittling 
the sources of information. They fool nobody but them- 
selves. 

To the majority of such the term "cost system" con- 
veys no definite idea. The reason is that in the past there 
have been as many ideas of what constituted a cost sys- 
tem as there were men to express the ideas. 

To those who have gradually evolved something 
definite the term creates the impression of a plan of 
records and computations having as its object the limit- 
ing of the downward trend of selling prices, so that goods 
would not be sold for less than their cost. 

A cost system, especially a cost engineering system, 
is all of that and more. It should not only tell at what 
point expense ends and profit begins, but it should tell 
what is covered in the unit or item on which cost is deter- 
mined. 

This is doubly advisable in the case of concerns which 
make product to order. In such cases nearly every cus- 
tomer requests a price in advance. This must be deter- 
mined by estimates. An estimate is simply a guess made 
in advance of manufacture upon the basis of such data as 
the manufacturer may have at hand. 

A cost system which determines the cost when the 
order is completed is valuable, but not nearly as valuable 
as the system which in addition to determining cost pro- 
vides records of production in such form as to enable the 
user to make estimates of the probable cost of prospec- 
tive orders quickly and with a high degree of accuracy. 

A third and no less important function of a cost sys- 
tem should be to furnish the basis of standards of per- 



106 Manual of Cost Engineering and Estimating 

formance which will enable the superintendent to reduce 
cost. 

Many systems are planned to provide certain data at 
the end of the month, the quarter, or the year. Such are 
of small value compared to the systems which provide 
immediate and adequate records. Data that is delayed 
for months after the occurrences recorded is practically 
worthless either as cost information, as a means of criti- 
cising the operation of the factory, or as a means of plan- 
ning for greater efficiency in the operation of the proc- 
esses. 

On the other hand, records which show the cost of the 
order immediately upon its completion do serve as a 
check against wrong estimates, as a means of weeding out 
inefficiencies, as a basis for standards of performance, 
and as a guide to the superintendent in his efforts at cost 
reduction. 

Records of cost and production should always be ar- 
ranged in such a manner that comparisons can readily be 
made of the cost of items with item and the output of 
period with period. 

Production records to be practical, must be very 
simple and easy both to operate and understand. The 
outline presented herewith will give a comprehensive 
view of such a record which is in use in hundreds of fac- 
tories. It lends itself readily both to operation in con- 
nection with cost systems of the type to be described in 
the chapters succeeding this, and for the information of 
the estimator, that he may make his estimates intelligently 
in accordance with actual records of performance, under 
the average of conditions in the individual factory where 
the product is made. 

For this record a form is required which will provide 
a line for each day of a five weeks period, with provision 
for totals at the end of each week, and also a monthly 
grand total. 

Headings should be provided for each machine, or 



For Paper Box Manufacturers 107 

other production center, on which it is intended to keep 
the record. The machine or other center may be desig- 
nated by either a number or name. The heading should 
cover subheadings of five columns, arranged for the re- 
cording of setting time, running time, miscellaneous time, 
idle time, and output. The columns should be arranged 
in the order in which they are named. 

For machines which operate at a practically uniform 
speed, the entire output can be recorded under a single 
heading. In the case of machines, the output of which 
varies with the type of product, it will be advisable to 
keep the records on the classification of product turned 
out by the type of machine rather than on the perform- 
ance of the individual machine itself. In the latter in- 
stances the heading over the group of columns should be 
left blank so that the name, either of the machine or 
classification of product, may be written in at will. 

The time reports of the cost system may be arranged 
for easy collection of this data if desired, or it may be 
drawn by a careful clerk from the ordinary type of time 
report. 

The reports from production centers on which it is 
desired to keep production records, should show sep- 
arately the setting time; the running time; account for all 
items of time, such as waiting, or shut down for repairs, 
when the machine is not available for operation on 
product; the idle time, which is the amount of the time 
during normal working hours that the machine is avail- 
able for production, but has no orders assigned to it. The 
amount of product should also be given in connection with 
each entry of running time. 

These items of time are transferred day by day to the 
record of the machine, primarily for the purpose of es- 
tablishing a basis for estimating, also for the purpose of 
comparing the performance of different machines and 
operators. 

In cases where the individuality of the machine is dis- 
regarded, and the product classified, the items recorded 



108 Manual of Cost Engineering and Estimating 

are entered under the proper classification. This enables 
the superintendent or estimator to obtain information of 
value in connection with the comparative time required 
to put different classes of product through the same 
process. 

At the end of a month, or other period, including sev- 
eral consecutive months, averages of time and output can 
be made to provide the basis of estimating the time which 
will be required to perform a certain operation on a given 
number of pieces. 

Dividing the total output of a period by the number of 
running hours, the average hourly output can be ascer- 
tained. This result, divided into the total of a prospec- 
tive order covering the same class of work, determines 
the number of hours that will be required for that 
process, based upon the average conditions. These hours 
multiplied by the rate which the cost system proves that 
process to cost per hour, under the same average of con- 
ditions, shows the amount which it is fair to assume that 
process will cost in the production of the order if it is 
secured. 

Taking again the same report and comparing the 
amount of idle time with the busy time of a certain 
machine, or group of machines, will show what proportion 
of time the machines have been available for work that 
has not been utilized. In other words it shows the rela- 
tion of output to capacity. 

Many manufacturers buy a machine that is said to 
have a capacity of a certain number per hour. Without 
making actual tests over a considerable period of time 
they base their estimates upon the maker's statement of 
performance. 

The maker's rating is based upon the speed of the 
machine operating continuously under the most favor- 
able conditions. If the purchaser of the machine will 
but keep the records of actual performance in his own 
plant he will find that the contingencies of the business 
reduce its output very materially. It is not uncommon to 



For Paper Box Manufacturers 109 

find that the actual output of a machine rated by the 
manufacturer at say 1500 pieces per hour, can be relied 
upon to produce an average of about 800 per hour. This 
does not indicate that the maker wilfully mistated the 
capacity of the machine. He based the claim upon ideal 
conditions, yet actual conditions in most factories are far 
from ideal. The production record shows the truth and 
thereby eliminates much of the probability of loss. 

Stoppages, readjustments, etc., are frequently the 
fault of the employee. The machine record covering the 
output of several machines of like character doing the 
same kind of work offers an opportunity to see which 
operator turns out the larger number of finished pieces. 
This affords the manufacturer with data which is very 
helpful in studying the best methods of performing any 
given operation, so that the best method may be adopted 
throughout the factory. It also offers an opportunity to 
compare the efficiency of the employees engaged upon 
like work. 

Considering the amount of time required to set the 
machines for various orders, gives the estimator an op- 
portunity to determine the saving in time between the 
long and the short runs. There is a very wide difference 
between the cost of scoring ten thousand boxes on a single 
order, and the cost of scoring ten orders of one thousand 
each. Under the old method of figuring cost on the basis 
of a percentage added to piecework rates, no account was 
taken of this difference. 

There are many ways in which the production records 
assist the manufacturer in overcoming the evils of the 
old guesses and makeshift methods. These were a pro- 
lific source of losses. 

Production records not only enable you to know 
what you have done, but they tell you very clearly what 
can be done. They also make it possible to determine 
very accurately what it will cost to do any given piece of 
work. 

In the table covering the Average Cost Per Hour of 



110 Manual of Cost Engineering and Estimating 

Processes for 1916, which is included in the Addenda of 
this book, the average output per hour of many of the 
processes is also given. In some of the processes there is 
not sufficient uniformity of units to permit practicable 
averaging. 

The data furnished for the compilation covered six 
months groupings, so that it is impracticable here to show 
the range of output as well as the range of cost. 

However, in his own factory, the paper box manu- 
facturer has the best possible opportunity to compile or 
chart the variation of output, so that he can place his em- 
ployees where they can produce most advantageously, 
as well as secure the most practical data for making 
estimates. 

It is unfortunate that some manufacturers who have 
had the opportunity to establish production records have 
not been inclined to do so. Some of those who have es- 
tablished them but have not been sufficiently energetic 
to develop the habit of using them. Because it is easier 
to follow the traditional methods which have become 
habitual they do so. Both of these types are losers be- 
cause of their apathy. 

The chief opponent of the production record is the 
incompetent superintendent. He does not want the facts 
of factory management recorded in a manner which may 
call down upon himself a serious amount of criticism. 

The man who watches his production records daily, 
and uses them to increase profits and efficiency, will never 
let them be discontinued. 



CHAPTER NINE 

Planning a Cost System 

Cost System Defined — Function of Cost System — Its Import- 
ance — Who Should Operate It — Factors in Successful Installation 
— Who Should Make Installation — Cooperation of Every Indi- 
vidual Essential — Qualifications of Engineer — Authority and Re- 
sponsibility — Making Survey — Making Plan — Time and Output 
Records — Types of Factory Divisions — Importance of Accuracy 
—Mechanical Recorders — Time Report a Charge Slip — Material 
Records — Perpetual Inventories — The Cost Memorandum — Tracer 
System — Inventory of Work in Process — The Record of Hours — 
Split Time Record — The Monthly Summary — Necessity for Care 
in Expense Distribution — Advantages of Cost Engineering. 

A Cost System is a piece of managerial equipment, 
intended to keep the management of the factory in touch 
with every occurrence, usual or unusual, in every di- 
vision of the workrooms; to determine where expense 
ends and profit begins on every factory order; to show 
which of several lines of product is most profitable, and to 
what extent; to show by comparative records the cost of 
production under various methods of operation; and to 
show the measure of output within the time unit for pur- 
poses of estimating on future production, and the setting 
of production standards. 

A Cost System has many functions and touches the 
most vital interests of a manufacturing business. It 
should be planned to meet the individual requirements of 
the individual business in which it is to be operated. It 
should never be left exclusively to the care of clerks. It 
should always have, as its chief, a man who has the in- 
terests of the business at heart; a man who has the ability 
to see that it is an index of conditions, who knows how 
to analyze its indications, and the authority to take action 
in accordance with them. 

A Cost System should be recognized according to its 
merits. It should never be allowed to take a position 
secondary to any other clerical work. Definite persons 
should be assigned to keep its records up to the minute, 
that it may be ever ready for the inspection of the man- 



112 Manual of Cost Engineering and Estimating 

agement, and reveal the otherwise hidden leaks of the 
business, for the prevention of losses. 

Success in the installation of a cost system depends 
upon many factors. The engineer who makes the plan 
must be competent to do the work. He should be a fac- 
tory trained man. The most able accountant will fail 
unless he has had in addition to his accounting experience 
considerable factory training. Experience with a large 
number of students of cost engineering has convinced the 
author that accounting experience, especially cost-ac- 
counting experience, unfits a man for this work. 

There must be throughout the entire factory and of- 
fice organization a willingness to cooperate fully with the 
engineer. The management should recognize that any 
person who refuses to extend his cooperation to the suc- 
cessful installation and operation of the system, is a men- 
ace to the success of the business and should be eliminated 
therefrom. 

The qualifications of the engineer, other than a fac- 
tory training, should be, an analytical mentality; infinite 
patience; the ability to make a clear, complete and defin- 
ite plan; to put the plan into operation; and to teach 
others to operate it so that it will not be dependent upon 
his presence. He must have sufficient capacity to advise 
with the management and hold their confidence; he must 
know the temper of shop men so that his presence shall 
not antagonize them; he must know the language of the 
shop in order that he shall escape the ridicule that is 
hurled at the man who assumes to be informed about 
things which he cannot intelligently discuss. If possible, 
he should be an experienced engineer rather than a 
novice. 

Having selected the engineer, tested his qualifications, 
and decided to place him in charge of the work, he should 
be given the full authority which his work demands. It 
is ridiculous, but a too common practice, to place re- 
sponsibilities upon a man and demand results, yet keep 
his hands so tied by lack of authority that success is well 



For Paper Box Manufacturers 113 

nigh impossible. Authority and responsibility go hand 
in hand. No man should- be burdened with responsibility 
who cannot be trusted with the authority necessary to 
achieve successful results. 

The first step in the installation of the cost system is 
known as the "survey." This is preliminary to the plan. 
The engineer must be fully informed as to every opera- 
tion or process within the scope of the factory. He should 
list them, note their arrangement and the established 
practice in routing work through the plant. 

In making the "plan," he must avoid duplication as 
far as possible. He should make the smallest practicable 
number of processing divisions, keeping in mind constant- 
ly the rule that two or more processes can be grouped for 
the purpose of determining the average cost per unit, 
only when their important expense factors are in approxi- 
mately uniform proportions. 

The following list will illustrate the divisions common 
to a set-up box factory: 

Liner; double scorer; single scorer; double corner 
cutter; single corner cutter; stayers, grouped according to 
size; quadruple stayer; single ender; double ender; strip- 
per; topper; wrapper; extension edge machine; lacing 
machine; paper cutter; paper slitter; gummer; shear; 
men's hand work; girls' table work. 

Provision must be made for the recording and com- 
pilation separately of the amount of time of each process 
that is applied to each order, the amount of output on each 
task, and the name of the employee doing the work. 

Whether the employee reports on a separate slip or 
card for each task, or the report is arranged to cover all 
tasks included in the day, is immaterial insofar as the re- 
porting is concerned. Economy of time for both the 
worker and the clerk favors the daily report rather than 
the individual task report. 

In designing the time and output report form, sep- 
arate columns should be provided for the reporting in 



114 Manual of Cost Engineering and Estimating 

connection with each task of the factory order number, 
customer or description, part of box, operation or divi- 
sion number, the ending time, quantity output, rate, if 
piece work, amount earned. Additional columns for the 
use of the office only, arranged to facilitate the assem- 
bling, separately, of the chargeable and non-chargeable 
items. 

The report should carry at its head the title "Daily 
Time Report" and provide for the recording of the name 
of employee, clock number, date, and starting time. 
Usually, at the bottom, a space is allowed for the fore- 
man's OK and signature. 

On the reverse side or at one end of the report may be 
printed the instructions for filling it out, with a schedule 
of the departments, showing the operations or processes 
covered in each, together with their numbers for refer- 
ence. 

It is inadvisable, in this connection, to show examples 
of forms. Every factory is different from every other 
factory and requires that forms be prepared to meet its 
special plan. The tendency to mistake forms for the sys- 
tem leads many novices to copy or adapt forms designed 
for other shops with the result that the system is either 
incomplete, unwieldy, or lacks coordination. A competent 
engineer will find no difficulty in designing forms to meet 
his needs. 

In making the plan the engineer recognizes three dis- 
tinct types of factory divisions : 

First. The departments, which may, in a strictly 
set-up box factory consist of groupings of processes, such 
as preparatory, plain box, fancy box, stock, and shipping; 
in composite factories they may cover stiff box, folding 
box, tubing, printing, novelty, raw stock, finished stock, 
shipping, etc. 

Second. The divisions, of which there may be any 
number within a department. The division covers a 
group of production centers on which the cost is to be 
averaged, and usually consists of a number of machines 



For Paper Box Manufacturers 115 

which are substantially alike and designed to perform the 
same operation or process. A list of some of the common 
divisions has been given previously in this chapter. Ad- 
ditional lists will be found in other chapters of this book. 
Third. The production center, which is the source 
of a stream of product, and may consist of a machine 
with all of the appurtenances and help necessary to pro- 
duce a stream of product, or it may consist of a person, 
the table-space and tools necessary for a hand process. 
In the case of machine centers, it sometimes requires sev- 
eral persons, working in a gang, on a single process. Then 
the pay of the entire gang becomes part of the expense 
of the center or unit. Exception to this rule is made in 
the case of machines where the number of people varies 
on different orders ; then the regular minimum crew of the 
machine is chargeable to the process and the extra peo- 
ple are charged to the order as helpers, at the wage rates 
only. 

It will thus be seen that the plan of the factory con- 
sists of a number of departments, each of which consists 
of a group of classified processing divisions, each of which 
again in turn is composed of one or more similar ma- 
chines or production centers, from which production re- 
ports are required; and which are grouped together for 
the purpose of obtaining an average hourly rate of cost. 

The time report is the initial record from the operat- 
ing divisions of the factory. Accuracy or inaccuracy in 
making the initial records determines the accuracy or in- 
accuracy of the final result. 

Experience proves that the hand-written report, when 
made by intelligent, conscientious employees is the most 
reliable and satisfactory. 

Mechanical time recorders do all that the makers 
promise, which usually is to record the moment at which 
the card or slip was put into the machine and stamped, 
or as is the case in a few instances it may both stamp the 
instant and automatically calculate the amount of elapsed 
time. 



116 Manual of Cost Engineering and Estimating 

If the employee fully understands the function of the 
time report as a charge slip, and is conscientious, it is 
unlikely that false reports will be made. If the employee 
is given to understand that the report is part of an espion- 
age system, intended to give an unreasonable "boss" 
excuses for finding fault, it is altogether likely that the 
element of fear will lead him to avoid as far as possible 
admitting inefficiency in the reports. Such use of the 
report defeats the object for which it is installed. 

Simultaneously with the reporting of the time of pro- 
cesses by the factory operators, a report must be estab- 
lished which will facilitate charging to each order every 
sheet, or other unit of material which is issued from the 
stock room. Every item of material used as supplies for 
the processes must be charged to the process consuming it. 

Material is the term applied to the items which enter 
into and become a part of the finished product. Charges 
for material are made directly against the factory order 
covering the product in which the material is used. 

Supplies is the term applied to items consumed in the 
processes of manufacture but not becoming a part of the 
product. In some instances the same item may be issued 
either as material or as a supply item, according to the use 
to which it is put. Occasionally a case arises where an 
item of material may be more readily chargeable as a 
supply. Wire on a stitching machine is so treated in some 
factories, where the stitcher work is likely to run fairly 
uniform. Great care should be taken in deciding which 
method to pursue. 

This is only one of hundreds of instances in the in- 
stallation of a cost system where the experience of an 
engineer is important. Apparently trivial items, when 
improperly charged, may develop important discrepancies 
when the volume of production is multiplied annually 
into hundreds of thousands or millions of items. 

It is always advisable to operate a requisition system 
and perpetual inventory in connection with stock and 
supply rooms. This prevents the issuance of any mate- 



For Paper Box Manufacturers 117 

rials or supplies without authority from proper persons. 
It makes some person definitely responsible for the invest- 
ment carried in merchandise. It makes it possible to trace 
lost items and to prevent much from being lost. The 
requisition serves as the fundamental record for both the 
charging of the material or supply item properly, and 
for the perpetual inventory. 

The carefully operated perpetual inventory has many 
functions. It prevents overstocking; shows quickly the 
materials available for the production of any order; 
warns when the stock reaches a predetermined minimum; 
is indispensible in making a financial statement for the 
purpose of obtaining credit; and is of great advantage in 
case of adjustment of fire losses. 

Perpetual inventories should cover all stock items, 
equipment, supplies, and work in process. A competent 
engineer should have no difficulty in preparing forms and 
instructions for the installation and maintenance of such 
inventories in connection with the installation of a cost 
system. In the properly planned cost engineering system, 
the file of cost memorandums covering incomplete orders 
serves as an authentic perpetual inventory of work in 
process, expressed in units of process time, and material 
items, but which can through known costs be quickly 
converted into money values. 

The Cost Memorandum, serves primarily as a ledger 
account against the factory order. It also has other func- 
tions. As mentioned in the preceding paragraph those 
on which the record is incomplete provide a very prac- 
tical perpetual inventory of work in process. It may be 
recognized as an authentic tracer system, showing at any 
date just what progress has been made on any order in 
the factory; who has done any part of the work on it, and 
when delivery has been promised. When the order 
has been completed, it shows the cost of the materials en- 
tering into the order; the amount of time and expense of 
each of the several operations involved in the work. It 
is a source of information for compiling data for making 



118 Manual of Cost Engineering and Estimating 

estimates and a competent basis for checking the accuracy 
of estimates. It shows the total cost of each order, the 
amount of profit or loss on each. It is a prolific source 
of information for the superintendent, the accountant, the 
estimator, and the manager. 

In preparing copy for the Cost Memorandum in con- 
nection with a cost engineering system in a paper box fac- 
tory, provision must be made for recording or charging 
all items of material required by the order. Groups of 
columns under divisional headings should be provided for 
the recording of the time of processes. Under the divi- 
sional headings there should be columns allowed for the 
date, employees' clock number, amount of time, and num- 
ber of pieces finished. Economy of space may be effected 
by providing groups with printed headings for such opera- 
tions as are common to set-up boxes, such as scoring, sheet 
cutting, corner cutting, staying, etc., and groups with 
blank spaces for other operations which may be writ- 
ten in by the clerk who makes the records. In shops 
where piecework prevails and the wages are considered 
specifically, in connection with process hour rates exclu- 
sive of wages, it is necessary to provide under each head- 
ing a column for the entry of the amount of piecework 
wages. 

Provision must be made on each cost memorandum 
for the assembly of the totals of time and wages on each 
process, as well as the total cost of materials. This should 
correspond as nearly as possible with the estimate form 
to facilitate the checking of estimates, an advisable pro- 
ceeding in each instance where a loss is shown, or where 
the amount of profit is less than a satisfactory percentage 
of the price. 

A Record of Hours affords the means of crediting 
each producing division with its product, expressed in 
terms of time. This record ordinarily consists of sheets 
or pages arranged to cover a period of five weeks, per- 
mitting totals to be made weekly and monthly. Sufficient 
double columns must be provided under divisional head- 



For Paper Box Manufacturers 119 

ings for recording, separately, the division totals, daily, 
of the chargeable and non-chargeable hours. At the end 
of the month the total of the divisional expenses is divided 
by the monthly total of chargeable hours for the purpose 
of determining the average cost per hour for the month 
just completed. The grand total for a series of months, 
preferably twelve, divided into the total expense of a 
coincident period, determines the true average cost per 
hour for the period. 

In factories where employees are likely to work in 
several different divisions during a pay period it is some- 
times advisable to use, instead of the ordinary hours 
record, a Split-time and Payroll Record. 

The Split-time and Payroll Record is made to cover 
the record of one employee for one five-week period, or 
month. Space is arranged at the top of the clock number 
and name of the employee, the month, and time rate of 
pay. At the left hand side space is provided for the 
dates. Across the page, under four or five divisional head- 
ings, which may be written in as required, are groups 
of columns for recording under sub-headings, the charge- 
able hours, non-chargeable hours, output, piecework rate, 
and amount. This is ruled for both weekly and monthly 
totals so that wages may be totaled weekly for payroll 
purposes, and hours and output monthly for costfinding 
purposes. Variations from this description should be 
made to meet the special requirements of the case in hand. 

When the Split-time and Payroll Record is used it 
is not necessary to use the Hour Records form previously 
described. The engineer should determine which is the 
most practicable method for the individual case in ques- 
tion. 

The Monthly Summary of Expenses, or Cost Record, 
is the final and pivotal form of the Cost Engineering Sys- 
tem. All of the previously described forms, except the 
Hours Record, are more or less similar to forms included 
in the cost accounting systems which have generally 
proven inadequate for modern requirements. In the 



120 Manual of Cost Engineering and Estimating 

Monthly Summary has been developed the most compre- 
hensive analysis of expenses possible at this writing. 

Once each month, preferably as soon as the trial bal- 
ance of the accounting system has been completed, the 
accountant or chief cost clerk should work out the sum- 
mary. 

On this sheet every expense of every kind is analyzed 
and distributed in such a manner that it is impossible for 
one process to carry any expense not involved in its oper- 
ation. The refinement to which distributions can be car- 
ried out makes any degree of accuracy possible. 

The Summary form provides a series of columns, one 
for each division, including not only processes but office 
and stock divisions as well. At the left should be placed 
the titles of the expenses in the order in which distribu- 
tion is to be made. 

Expense items may be grouped for distribution simul- 
taneously only when they have the same object and the 
proportions of benefit to factory divisions are identical. 
Thus it will be seen that under ordinary conditions rent 
and heat, which are both directly related to space re- 
quired, may be grouped and distributed upon the basis 
of area. Exception should be taken to such grouping if 
the type of building construction required by different 
divisions involved different investment, if certain areas 
are heated to special temperatures, or if located in a 
retail district and a store is operated in connection with 
the manufacturing business. 

More will be said of the matter of distribution in the 
succeeding chapters. This instance is used to show the 
care with which provision must be made in designing the 
summary form, so that only such items as may be cor- 
rectly distributed in the group shall be included in the 
grouping arrangement. 

The particular design of the form is immaterial, be- 
yond the provision for distributing the expense items to 
the divisions in the proportion in which they have bene- 
fited. 



For Paper Box Manufacturers 121 

Expense groupings may or may not, at the discretion 
of the engineer, be provided on the summary form. Data 
for use in making the distributions may be included or 
excluded at will. But the expense items must be ar- 
ranged and distributed in such a manner that each pro- 
cess shall be charged with exactly that proportion of each 
expense which has benefited it and no more. The total 
of the divisional expense divided by the number of 
chargeable hours of a coincident period will determine 
the average cost per hour for the period. 

The chief advantages of Cost Engineering are the 
comprehensiveness of the factory data, the accuracy with 
which indirect expenses are distributed, the practica- 
bility of the resultant rates as a means of determining the 
factory order cost, and the simplicity with which the cor- 
rectness of all showings may be proven. 



So far as possible, a man should push a job 
through to a finish when once he has under- 
taken it. To some sort of a finish; if not of 
the whole job, then some complete separate 
part of it, something definite, that can count 
as a bundle by itself, and which, when it is 
tied up, is really out of the way. Don't 
break things off in the middle. Don't keep 
having to get at a thing. When you have 
to take your attention by the scruff of the 
neck every minute or two and force it back 
on the scent, you are making a terrible and 
useless drain on your will power. 

Another practical conclusion is this : As 
far as possible bunch the little things you 
have to do so as to make one larger job of 
them. If you can make a list of the mi- 
nutiae that need attention, and then go at 
them with a running start, the end will be 
reached — not necessarily quicker, yet cer- 
tainly with a tremendous saving of energy. 
— "In Office." 



CHAPTER TEN 

Installing a Cost System 

Difference on Factors — Inaccuracy in Rate Compared to In- 
accuracy in Result — Why Manufacturers are Satisfied with In- 
ferior Systems — Many Concerns Insolvent Without Knowing It — 
Losses Unrecognized Recause Records are Inadequate — Law of 
Action and Recreation Inexorable — All Losses Must be Offset by 
Gains Refore Profit Can be Realized — Financial Rankruptcy and 
Moral Rankruptcy — Profitableness of Following Instructions of 
Engineer — Making Installation — Instructing Workmen — Foremen's 
Duties — Cost Clerk's Work Outlined — Finding the Lot Cost — Com- 
parison of Cost with Estimate — Filing Records for Reference. 

In no two factories are the conditions alike. For that 
reason any general description of a cost system, or in- 
struction for operating such systems, is to be undertaken 
with great caution. 

The Cost System is the most vital of records used by 
manufacturing concerns. The accuracy or inaccuracy of 
the cost system guides the business toward success or 
failure. 

The reader must realize that an inaccuracy which 
would be insignificant in a result may be serious in a 
rate. A fraction of a cent in the rate, multiplied by the 
thousands of units to which it is aplied, can create great 
losses. An inaccuracy in a distribution rate is multiplied 
in the act of distribution by the number of units involved. 
This again is multiplied for any mass of hours on which 
the erroneous rate is used. 

Lack of information, or indifference to the impor- 
tance of these truths, leads many manufacturers to be 
satisfied with a system which though inaccurate seems 
"good enough." They rest in confidence that they know 
their costs, because they have a "Cost System," until bank- 
ruptcy stares them in the face. Many concerns are in- 
solvent and do not know it. Even an insolvent concern 
has a chance to get on its feet if the management dis- 
covers the condition before the creditors do and acts im- 
mediately. 

When it is realized that a manufacturing concern can 



124 Manual of Cost Engineering and Estimating 

lose fen per cent of its capital yearly and remain in busi- 
ness for about fifteen years, it will be more clearly un- 
derstood why manufacturers do not more quickly pay 
the penalty for wrong methods. 

The average manufacturer, aided by the accountant 
who either wishes to please or is afraid to stand against 
the employer, and abetted by the fact that the accounting 
profession itself has failed to establish definite principles 
and rules of procedure, manages to salve his conscience 
by omitting economic expenses in his statement. He 
thus fools himself into the belief that he has made some 
profit, or at the worst has "broke even." 

"Hope springs eternal in the human breast." Even 
though a loss is admitted, he anticipates that the pendu- 
lum will swing the other way and that a good season will 
carry him over onto the profit side before it is too late. 
Sometimes it does. But, generally, the plant changes 
hands. Someone else puts in new capital and keeps up 
the merry round, clinging to the belief that "If we can 
only keep the wheels turning we must be making money." 

The law of action and reaction is inexorable. What 
is lost on one series of transactions must be more than 
gained on others before there can be a profit on the whole. 
The longer a manufacturer waits before he grasps the 
truth that there can be no advantage under any circum- 
stances in taking an order at less than cost of production 
under normal conditions, the greater becomes the barrier 
to future success. 

Man-made legal codes enable a man to get out from 
under the burden of financial bondage, through the bank- 
ruptcy court, but there is no bankruptcy act which will 
relieve him of the moral responsibility that follows in the 
wake of careless business methods. He must recognize 
and conform to the law of compensation or pay the pen- 
alty in failure. The fundamental principles of the uni- 
verse are unyielding in their action. "Whatsoever ye 
sow, that shall ye also reap." 

No other effort will yield as large results as the atten- 



For Paper Box Manufacturers 125 

tion given to the study and use of the data afforded by 
the cost system. Unless such effort is applied it is of 
little value, barely worth keeping up. The value of the 
results obtained will depend upon how closely the instruc- 
tions of the engineer are carried out. 

At a predetermined date, after the forms described 
in the preceding chapter have been printed, the real work 
of installation is begun. At this time the plan should be 
complete and carefully checked for omissions or errors. 
If possible a conference of all officials, including foremen 
and foreladies, should be held, at which the plan should 
be outlined, the object of the system explained, and the 
full co-operation of everyone assured. 

Each workman in the shop, engaged in productive 
operations, should be provided with time report forms, 
and personally instructed in making the necessary rec- 
ords. If the daily type of report is used, he should at the 
beginning of the day enter at the top in the spaces pro- 
vided therefor, the date, his name, clock number, and the 
time when he starts work. On the first line under the 
proper headings the order number, the name of the cus- 
tomer, or the name of the job, the kind of work (by num- 
ber, if processes are numbered), and if the work is done 
on a machine the machine number should be given. 

When the task is finished, the time at which the task 
ended should be recorded under "Ending Time," and the 
number of pieces finished written under "Output." In 
recording time on operations the employee should not 
compute the amount of elapsed time. He should enter 
the time by the clock at the moment of completing the 
task. Time may be expressed either as hours and minutes, 
or by the more advanced method of hours and tenths, 
or hours and hundredths. Dials to be applied to ordinary 
clocks, and especially designed for the decimal showing 
of time, can be purchased for a nominal consideration. 
These facilitate the addition of long columns of time, 
making it possible to do the work with an ordinary add- 
ing machine. 



126 Manual of Cost Engineering and Estimating 

When the second task is taken up, the order number 
and other data is written as in the first task. This pro- 
cedure is continued throughout the day on each task. In 
case of waiting time or other delay, the cause of delay 
must be given on a line at the point in the day's work 
where the incident occurred so that all time items will 
be kept in their consecutive order. 

The employee should be fully instructed in the use 
of the time report so that any prejudice which he may 
hold against making such records may be overcome. If 
he is convinced that the records are primarily intended 
for use in making accurate charges to orders, little diffi- 
culty will be had in getting his co-operation. 

The engineer should visit the workrooms at frequent 
intervals for the purpose of answering any questions that 
may arise. He should instruct the foremen fully in 
methods of watching the time reports, as he makes his 
rounds, to see that records are properly made up at the 
proper time, not left until a "convenient" time, usually at 
the end of the day. 

All time reports should be filed with the foreman at 
the end of the day's work. He should put his O. K. on 
such as are in his opinion correctly filled out. The entire 
file should be placed in a safe or vault. It must be kept 
in mind that these reports and the resultant postings rep- 
resent their face value in money, as surely as do the 
charge sales slips of a retail store. 

The clerk having been selected to do the posting 
which will carry the records forward to the orders, the 
engineer will on the following morning give him instruc- 
tions in handling the reports and making the postings. 
This procedure will vary, of course, with the variations 
in form of report used, but in the case of a daily report 
covering time and piecework would be substantially as 
follows : 

(a) Examine all reports to see that they have been 
properly made out. If not, such reports as are wrong 
should be taken back to the workrooms for correction. 



For Paper Box Manufacturers 127 

Both the engineer and clerk should go together to the 
foreman and explain the error. Then the foreman should 
take the report back to the workman responsible. The 
engineer and clerk should never go "over the head" of a 
foreman directly to the employee, unless the foreman re- 
quests them to do so. 

(In every factory there should be a definite plan of 
organization with definitely assigned authority and re- 
sponsibility to each person. That line of authority should 
never be broken or disregarded except in case of emerg- 
ency, when it becomes the duty of every individual to do 
his best for the interest of the employing company. Fac- 
tory discipline can in no other way be maintained with- 
out friction.) 

(b) Note the starting and ending time for the day, 
and see that they correspond to the time punched on the 
"In and Out" clock, both forenoon and afternoon. 

(c) Calculate the elapsed time on each item, extend- 
ing the results into either the chargeable or non-charge- 
able time columns according to the nature of the indi- 
vidual items. 

(d) If the work is piecework, enter the rate in rate 
column and extend the amount of earnings into earnings 
column. 

(e) Total the number of chargeable and non-charge- 
able hours for all the workers in each process division, 
entering the total of each class under proper division 
heading in the columns provided. 

We are now ready to make the postings directly 
against the orders. The file of cost memorandums being 
provided, as described in the preceding chapter, the 
chargeable items are entered on the cost memorandum 
under the headings which correspond to the divisions in 
which the work was done. All the essential information 
should be posted. In case the work is done at piecework 
rates, the amount of wages should be entered in space 
provided. 

This routine is repeated daily as the regular work of 



128 Manual of Cost Engineering and Estimating 

the cost clerk. After the clerk has been fully instructed, 
the engineer will be required for consultation only. 

In every instance there should be an understudy, so 
that the absence of any person shall not interfere with 
the work going forward without delay. 

When the posting for the day has been completed 
the cost memorandums for the finished orders should be 
withdrawn from the file, and the cost calculated as fol- 
lows: 

(a) Total the columns of time and the material ex- 
pense, carrying each total to the summary of job cost 
provided on the memorandum for the assembling of this 
data. 

(b) Extend all items of time work at the full time 
work rates or total cost per hour. Where piecework 
rates were applied, the time of the operation should be 
extended at the rate found for manufacture cost with- 
out wages, and the piecework wages also entered in 
proper places. 

When all entries have been made the total cost of the 
order is found by adding up the expense columns. 

If the order shows a loss, or less than a satisfactory 
rate of profit, the officer of the company who is desig- 
nated for the work should have the matter brought to 
his attention. In fact it is advisable, at least until the 
system has been in operation for some time, to have this 
official scan all completed memorandums. 

Comparison of the data included in the summary of 
job cost with the estimates, wherever estimates were given 
in advance, is advisable and will prove of great value to 
a conscientious estimator. 

All completed memorandums should be kept in a 
file in numerical order for reference in case the order is 
to be duplicated. A few manufacturers prefer to keep 
the cost memorandums under the customers' names. 
This method is much more cumbersome and therefore 
less desirable. 



CHAPTER ELEVEN 

Making the Summary 

Object of Summary of Costs — Who Should Make Summary — 
Preparation of Data — Direct and Indirect Expenses Defined — 
What Can be Combined for Distribution — Generalization Objec- 
tionable in Cost Engineering — Arrangement of Expense Items — 
Effect of Wrong Method of Charging — Why Process Costs Must 
be Determined — No Expense is Basic — Order of Consideration — 
Relation of Expense to Means of Distribution — Danger of Indif- 
ference to Variation in Conditions — Fundamental Principle of 
Expense Distribution — Degree of Accuracy Required- — Factory 
Individuality Makes Uniform Systems Impractical — Suggested 
Grouping of Expenses — Exceptions Likely — Importance of Small 
Discrepancies — Common Bases of Distribution under Cost En- 
gineering — Variations from Rules Illustrated — Finding the Cost. 

The object of the Summary of Costs is to determine 
the average cost per chargeable, or revenue-producing, 
hour for each of the several operations or processes en- 
tering into the manufacture of the product. 

This is done by charging each of the producing di- 
visions with its expenses, and dividing the total expense 
of a period by the number of chargeable hours produced 
in the division for which the expense was incurred. 

While the making of the Monthly Summary of Costs 
is usually the work of the accountant, it may be done by 
some other person with his cooperation. 

Preparation for the making of the summary should 
be begun at the beginning of the first month in which the 
system is operated, by a plan of handling the expenses 
which will retain the identity or purpose of each expense. 

Expenses are of two kinds: direct and indirect. Di- 
rect expenses are items which benefit only one division 
and are in consequence chargeable in total to such divis- 
ion, no distribution being necessary. Indirect expenses 
are those items which benefit two or more divisions and 
must be charged to them in the proportion in which each 
is benefited. 

In arranging the expenses, for ready application to 
product through the summary, care must be taken not 



130 Manual of Cost Engineering and Estimating 

to combine in a single account two or more items which 
have different proportions of benefit. This would make 
it impossible to properly distribute the total. 

For this reason the accounting system of the factory 
should contain no such accounts as "General Expense," 
"Burden," or "Overhead," but the items ordinarily 
charged to these accounts should be arranged in a man- 
ner that the total of any group can be distributed simul- 
taneously. That is, the proportions of benefit to the pro- 
ducing divisions should be identical, so that when the 
total of the group is distributed there will be no injustice. 
Injustice, in charging the expenses to the divisions, is 
passed on to the customer through the hourly rate for 
the process overcharged. 

As the total of expenses is always definite, whether 
known or not, any amount overcharged develops an un- 
dercharge in some other division. 

If every customer bought exactly the same propor- 
tion of the product of each division there would be no 
injustice. But paper boxes are made in such variety that 
certain lots may take a great deal of the time of divisions 
which are required but little in the production of other 
lots. Practically no two lots take the same proportions 
throughout. Therefore it is very important that charges 
be made correctly. 

It has been customary in the past to assume that the 
payroll was the first item to be considered. In the old 
practice of cost accounting this was practicable, because 
wages was considered a basic expense factor, upon which 
other elements should be distributed. 

No expense is basic. Every item of expense is ele- 
mental. None, therefore, has a special reason for con- 
sideration as being of greater importance than any other. 
It follows then that the order in which expenses are con- 
sidered is purely arbitrary. The best arrangement is thus 
the one lending itself to quick understanding and to a 
minimum of entries, recapitulations, and distributions. 

Let us then consider them in the order in which they 



For Paper Box Manufacturers 131 

would occur to us if we were establishing a new factory. 
We would need to arrange for a building before we could 
plan the equipment. Following the equipment we must 
consider power to operate the equipment. Then comes 
the lighting facilities; supplies; supervision and admin- 
istration, foremen, and finally the workmen. Thus we 
find that building expense takes first place in the natural 
order of expenses. 

The statement has previously been made that ex- 
penses should be grouped together for simultaneous dis- 
tribution only when the benefits which they provide for 
the various processing divisions are in identical pro- 
portion. 

To provide the building and keep it in proper condi- 
tion for use, it is necessary not only to arrange for the 
necessary amount of floor area, but to keep it clean, and 
heated to a comfortable temperature. 

Ordinarily, then, we can combine rent, heating ex- 
pense, janitor service, and repairs. These are the items 
covering the requirements. Frequently, manufacturers 
are heard to declare that they do not have to consider 
rent because they own the building. In the event of 
ownership, consideration must be given to the facts of 
investment, risks, and time. The owner must consider 
that he is entitled to interest on his investment. 

Taxes must be paid on that investment, which in- 
cludes not only the building but the ground as well. In- 
surance on the building is a necessary item of expense. 
Unless a reserve for rebuilding is established, a time will 
come when the building will be no longer serviceable 
and there will be no funds with which to rebuild. These 
items should be considered as representing rental ex- 
pense, to which must be added the items of heat, etc., 
exactly as though rent was paid. This may be disappoint- 
ing to the man who has fooled himself into the belief 
that he could produce boxes cheaper than his competitor 
because he owned his building. But it is simple justice 
and more profitable for him in the long run. 



132 Manual of Cost Engineering and Estimating 

There are many possible conditions which must be 
taken into consideration by the cost engineer in connec- 
tion with the handling of expenses. These may affect 
the ordinary rules of expense distribution. 

For example, differences in temperature of rooms is 
sometimes necessary. In some departments boys or por- 
ters who are on the payroll may do the sweeping, instead 
of having special help for the purpose. Under certain 
conditions a heavier type of building construction is re- 
quired for certain types of machines or for carrying 
large amounts of heavy materials. Special conditions 
require special treatment for accurate results. 

The fundamental principle, each beneficiary must be 
charged in proportion to the benefit received, never 
varies. If accuracy is to be secured it must always be 
recognized. Of course the rules of expense distribution 
may be very uncertain; e. g., while the rule is that rent, 
heat, janitor service, and repairs may be grouped and 
distributed upon the basis of floor area used by the re- 
spective divisions of the factory, we find many instances 
where a strict following of the rule would violate the 
principle. In such instances we must conform to the 
principle by establishing special rules to meet the imme- 
diate conditions. 

The principle of expense distribution is fundamental. 
It cannot be violated without destroying accuracy, any 
more than can the principle of gravitation be violated 
without destroying equilibrium. Rules may be estab- 
lished for guidance under ordinary conditions. But rules 
must conform to principle, even though special rules 
must be established for every factory. 

The failure of cost accounting has been due to mis- 
taking formula for principle, the blind following of tra- 
ditional rules instead of the skillful application of well 
defined principles. 

Accuracy is important. But the degree of accuracy 
which is important depends much upon conditions. There 
is no such thing within the range of human knowledge 



For Paper Box Manufacturers 133 

as absolute accuracy. A degree of accuracy practical in 
one instance might be destructive in another. Some di- 
mensions on the machines in use in a paper box factory 
might vary a quarter of an inch, others must be accurate 
to the thousandth of an inch. If the machine builder 
made all parts with the same degree of accuracy that he 
must the more important, he would waste time and make 
the expense of the machines prohibitive. If he permitted 
inaccuracies at vital points which are permissible at other 
places, the machine would be impractical if not entirely 
useless. 

Just as the mechanical engineer not only must un- 
derstand the principles of the seven powers, but must 
have the skill and experience to apply those principles, 
so must the cost engineer have the knowledge, the skill 
and ability, to create a system providing for accuracy at 
each step according to the requirements of the case in 
hand. 

The reader will have understood clearly after the 
explanations heretofore given, that any formulae which 
have been presented have been illustrative only, and are 
not to be considered as established methods advocated 
by the author. Any system to be practical must be 
planned, with full knowledge of the principles of cost 
engineering, so that the special conditions of the case in 
hand will be fully met. 

Uniform systems cannot be established in multiform 
factories. Since the conditions in paper box factories 
differ widely, the scope of this book can be only the gen- 
eral features of the science of Cost Engineering, with 
sufficient detail to show the necessity for care and skill 
in working out the problem which the individual factory 
presents. 

With this statement fresh in the mind of the reader, 
the author presents an outline of the more important 
expense factors, arranged and grouped in the manner 
frequently used. The list must not be considered as com- 
plete, nor the groupings practical under all conditions. 



134 Manual of Cost Engineering and Estimating 

Building Expense: 

Rent, or, Depreciation reserve and insurance on 
building, and interest and taxes on investment 
in building and realty. 
Heat. 

Janitor Service. 
Building Repairs. 

Equipment Expense : 

Replacement Reserve (Depreciation). 
Interest on Investment. 
Insurance on Equipment. 
Taxes on Equipment. 

Power Expense: 

Total of Equipment Expense on power equipment. 
Total of Building Expense chargeable to power. 
Repairs. 

Wages, Supplies, etc., for power department, in- 
cluding fuel. 
Current (if purchased from central station) . 

Light and Toilet Expenses: 
Current or Gas for Lighting. 
Lamps, Cords, Tips, Globes, etc. 
Water for Lavatories, Soap, Towels, etc. 

Factory Administration Expenses: 
General Superintendent. 
Factory Clerks. 
Factory Office Expenses. 
Factory Phones, Telegraph and Postage. 
Factory Stationery and Office Supplies. 
Porters and Elevator Operators. 

Commercial Administration Expenses: 

Executive Salaries. 

Office Salaries, except factory and sales. 

Telephones and Postage. 

Stationery and Office Supplies. 

Bad Accounts and Collection Expenses. 



For Paper Box Manufacturers 135 

Discounts and Deduction to Customers. 

Federal and Corporation Taxes. 

Interest on Work in Process. 

Interest on Accounts Receivable. 

Insurance on Work in Process. 

Craft Organization Dues and Traveling Expenses. 

Selling Expenses: 
Sales Manager. 
Sales Office Salaries. 
Salesmen's Salaries and Commissions. 
Sales Traveling Expense. 
Sales Phones and Telegraph. 
Stationery and Supplies. 
Advertising and Postage. 
Samples and Sample-making. 
Donations. 

Local Organization Dues, Etc. 
Finished Stockroom Expense (conditional). 

Packing and Local Delivery: 

Rent, Packing and Shipping Dept. 
Equipment Expense, P. & S. Dept. 
Supplies, P. & S. Dept. 
Trucks, Stables, Etc. 
Wages. 

Stock or Merchandise Departments: (Raw and Fin- 
ished should be considered separately.) 
Rent. 

Equipment Expense. 
Insurance on Mdse. Carried. 
Interest on Investment in Stocks. 
Taxes. 
Shrinkage. 
Light, etc. 

Commercial (purchasing, etc.). 
Transportation. 
Supplies. 
Selling Expenses. 
Wages. 



136 Manual of Cost Engineering and Estimating 

In addition to the above groupings under classified 
headings there are a large number of direct expenses not 
subject to distribution but chargeable to each division 
directly as incurred for its benefit: 

Direct Expenses : (Not subject to grouping for dis- 
tribution.) 
Wages of Foreman (limited distribution under cer- 
tain conditions). 
Wages of Workmen. 
Spoilage. 

Divisional Supplies. 
Special Equipment Expenses. 
Divisional Repairs. 
Compensation Insurance. 
Workmen's Wages. 
The foregoing list must not be considered complete 
but as illustrative of the rule of expense grouping, with a 
fair degree of comprehensiveness. 

Under certain conditions it may be necessary to de- 
viate widely from the grouping shown. Many of the items 
may be so involved as to require special and separate 
handling. 

Exceptions to the common rules of distribution, as 
illustrated in connection with "building expenses" in the 
preceding chapter, may occur in connection with many 
items, and undoubtedly will in some cases at every 
factory. 

A Cost System is analogous to a railway system, with 
common rules representing the main lines and branches, 
and exceptions being the spurs and sidings. Attempting 
to operate either with superficial knowledge is likely to 
result in disaster. Either a switch, or the wrong applica- 
tion of a rule, may seem a little thing in itself, but may 
create a divergence leading to a destination or result far 
from that aimed at. 

When manufacturers learn the ultimate importance 
of small discrepancies, as an influence for shrinkage in 
profits, they will be more likely to appreciate the value 



For Paper Box Manufacturers 137 

of the services of an experienced cost engineer. Less 
likely will they be to attempt either to work out the 
solution of their own cost problems or to entrust this 
profit-affecting work to inexperienced employees. 

In attempting to distribute expenses the reader 
should keep in mind the fact that each division is charge- 
able only with such expenses, or proportion of expenses, 
as have actually been involved in the production of the 
output of the division so charged. 

The common bases of distribution follow: 

Building Expenses — Area of used space. 

Equipment Expenses — Replacement value of equip- 
ment. 

Power Expense — Horsepower hours. 

Light and Toilet Expense — Personal hours, or pay- 
roll hours. 

Factory Administration Expenses — Chargeable 
hours. 

Commercial Administration Expenses — Extended 
values at cost. 

Selling Expenses — Extended values at cost, when 

sold. 
Packing and Local Delivery — To be determined 

by circumstances. 

Raw Stock Expenses — Usually applied on basis of 
cost of stock. 

Finished Stock Expense— Applied by percentage to 
stock carried for customers, or through selling 
expense, according to conditions. 

Foremen's Wages — Payroll hours of divisions 
supervised by each. 

Generally speaking, the use of the thing purchased 
will indicate the proportions chargeable to divisions. This 
is not always just. Take, for example, the element of 
light: The superficial thinker follows the method here- 
tofore always adopted by cost accountants who have 



138 Manual of Cost Engineering and Estimating 

braved the criticism of the profession by attempting 
analysis, the assumption that lighting expense is charge- 
able in proportion to the amount of electric current or 
gas used for artificial light. 

Aside from the mechanical use of light, such as blue- 
printing and photography, the purchase of electric cur- 
rent or gas for lighting is a contingent expense in con- 
nection with the use of light, analogous to the expense of 
repairing a machine. The worker who operates near a 
window is no less a user of light than his fellow who 
needs the lamp. As a matter of fact, he has a better 
light for his work than the lamp user. The purchaser of 
the product in neither instance is responsible for the plan 
of the building, the hour of day, or length of day, which 
makes artificial light necessary in one instance and un- 
necessary in the other. Nor should the purchaser of 
either profit or lose because of the arrangement of the 
equipment, or of any of the conditions for which he is 
not accountable. 

Light is of two kinds. Artificial light is purchased to 
supplement daylight because it is customary to work at 
hours or under conditions wherein daylight is not avail- 
able. Light is necessary for the use of people and must 
be provided for each person employed in the factory, 
whether considered a productive employee or not. The 
difference between the amount used by one individual 
and another is unmeasurable. Therefore, light expense 
is not chargeable on the basis of the amount of current 
used, but on the basis of the time of individuals at work 
in the factory in any capacity. 

Many people will say that light is a very insignificant 
expense, not worthy of such special consideration. But 
the distribution of light on an improper basis will affect 
a rate. The discrepancy will be multiplied a thousand- 
fold on an order involving a thousand hours. 

To cover all the points likely to arise in the correct 
installation of a cost system, would not only take more 
space than is available in this book, but would be tire- 



For Paper Box Manufacturers 139 

some to the reader. Therefore, he should remember the 
necessity for extreme care in everything involved in the 
creation of rates. 

When all the expenses of the factory and its business 
departments have been properly analyzed, grouped and 
distributed in proportion to the benefit conferred by each, 
the cost per hour of each process is determined. This 
is done by dividing the total of the divisional expense 
by the number of chargeable or revenue producing hours 
that have been charged to the factory orders during the 
period covered by the expenses considered. 



"One of the first things that a man has to 
learn in business is how little he can do by 
himself. When he finds that out he begins 
to look around for people to do what he 
can't. — Henry Ford. 



CHAPTER TWELVE 

Practical Estimating 

Records a Safer Guide than Recollections — Laxity a Cause 
of Inefficiency — Groups of People Change Less Rapidly than In- 
dividuals — Stability of Output Average in Individual Factory — 
Impracticability of Using Rorrowed Records — How to Compare 
Hourly Cost Rates and Production Costs — Rasis of Estimates — 
Example of Estimating from Records — Guesswork Eliminated — 
Classifying Product for Estimating Data — Estimating is Price- 
making — The Point that Insures Fairness — Estimating Rlanks — 
Fundamental Requirements — Checking the Work of the Estima- 
tor — Lists of Materials and Processes — Suggestions. 

In the preceding chapters the reader has been shown 
the necessity for discarding old and adopting new meth- 
ods; a comparison of the cost accounting fallacy with 
cost engineering practicability; how all expense factors 
are related to the time element; why average rates of 
cost are more stable as a basis of pricemaking; the value 
of production records; and the modus operandi of Cost 
Engineering. 

He has been shown that cost is the result of condi- 
tions and can be influenced only by changing conditions, 
not by schemes of figuring; that when production of an 
item is once accomplished, no influence under the sun 
can change the amount of its cost. 

We have no means of knowing the future except by 
predicting its probabilities upon the past. We know that 
records of the past are safer than recollections of the 
past; that compilations of recorded data are a safer guide 
than confused mental impressions and their resultant 
conclusions; that while the man who has suffered or lost 
through moral or economic weaknesses in the past may 
feel sure that he will do radically different in the future, 
experience proves that actual changes are slow. In a 
factor}' organization which has become inefficient through 
lax methods, the change is slower. One man may make 
a strong resolve to change his habits and develop a no- 
ticeable change at once. But an effort to synchronize a 
hundred minds so that they will act in unison, in a man- 



142 Manual of Cost Engineering and Estimating 

ner different from their custom, is a slow and laborious 
task. 

These things being true, records being used to prove 
their truth, we find it safe to assume that a body of peo- 
ple engaged in the manufacture of paper boxes will, 
under the same conditions of equipment and supervision, 
work next week at the same rates of speed as they 
worked last week; next month they will produce as much 
in the same hours that they did last month. The average 
rate of production per hour for one period of six months, 
or a year, will be about the same as for another. 

Now, if records are kept continuously, and the aver- 
age for twelve months used for one month; and at its 
close, the new month's record added, dropping off the 
twelfth month preceding; thus making a new average, 
eleven-twelfths of the data being the same as in the pre- 
viously used average, there can be little change in re- 
sult. The only influence for change will be the difference 
between the data of the month added and that of the 
month omitted. 

We have shown how little this will affect the average 
rate, and therefore how safe it is to use average rates of 
cost in making estimates. 

Output records will show even less variations. Ma- 
chines are driven by the same power, at the same speed, 
throughout busy seasons, and dull. 

If, then, we have known rates of output per hour for 
the various processes, under the circumstances and con- 
ditions which prevail in a given factory; and also have 
known cost per hour of operation of the same processes; 
we have unquestionably the safest possible basis for pre- 
dicting, or estimating, future performance and costs. 

It is not safe for one factory to use the records of an- 
other factory in making estimates. The "atmosphere" in 
different factories varies greatly. One factory is managed 
by an apathetic management and work moves slowly. 
Every employee feels the influence of lethargy and attunes 
himself to the slow time of the institution. In another 



For Paper Box Manufacturers 143 

factory, everything moves by schedules: They are set 
with the purpose of accomplishing results in minimum 
time. There is in this case very little lost motion. The 
employee never has to ask for orders. They are planned 
far in advance. 

It would be ridiculous for one of these factories to 
use either the production records or the cost rates of 
another. Slow time usually means low hourly rates of 
cost, with high production cost, because comparatively 
few pieces are finished in the hour. Rapid production, 
on the other hand, will probably influence hourly rates 
so that they will seem high, yet production costs are likely 
to be lower than in the other case. 

Comparisons of hourly rates in different paper box 
factories can only be intelligently made if both the hourly 
rate and the production record are considered. 

It follows that the estimates of cost should, whenever 
possible, be made upon the basis of carefully kept records 
of the performances of machines and people in the fac- 
tory producing the boxes. 

Under ordinary conditions no two men make esti- 
mates that will stand comparison. Estimates in the ordi- 
nary sense are purely advance guesses, as to how much 
it will cost to produce a certain number of boxes of given 
specifications. 

More or less data are used by some estimators. 
Others make an out and out guess as to the price per 
thousand that should be charged for a box, without 
measurements or calculations. Some of these people 
(and they are usually men whose work is not checked 
for errors or losses) boast that they can tell within one 
per cent of what it will cost to make any number of 
boxes of any given description. 

As a rule these people stop estimating as soon as a 
cost system has been installed. They do not agree with 
the findings of the system. Whenever they can, they either 
prevent or delay the installation of the system. It is only 
natural that they should not like to have their guesses 



144 Manual of Cost Engineering and Estimating 

tested by a mechanically perfect system. It is apt to in- 
jure their "prestige." 

With a Cost Engineering System such as has been 
already described, and with complete production records 
from the factory divisions, the element of guesswork 
is very largely eliminated from the estimate. 

Let us take, as an example, some actual figures from 
experience in factories where complete systems are in 
use: In a certain period of time the staying machines 
were operated 16,665 productive or chargeable hours. 
The output of these hours was 11,394,948 pieces, and the 
total cost of operating the stayers was $9,980.87. 

By dividing the hours into the total expense we find 
that the average cost per hour is $.60. Dividing the 
hours into the production we discover that the average 
output per hour was 624 pieces, boxes and covers, with 
four corners each. 

If we now have in hand the work of estimating on 
the cost of making ten thousand boxes, with cover also 
stayed, we know that it will require the staying opera- 
tion on 20,000 pieces. We divide 20,000 by 624 and find 
that it will require 32 hours of the time of staying ma- 
chines to do the work. The average cost per hour is 
known to be $.60. We then multiply the number of 
hours (32) by $.60 to find the cost of staying, which is 
$19.20. 

There is no guesswork about this. It is the average 
cost of staying average size pieces, under the average of 
the conditions in that factory. 

Some employees may be and no doubt are capable 
of producing stayed boxes faster than that rate. Others 
are slower. But the average over the long period bal- 
ances the slower with the faster. 

The estimator cannot know which operator will 
operate the stayer on this work. If he makes the calcu- 
lations on the basis of rapid operation, he will be unable 
to get fast operators on all of the work. Slower opera- 
tors will take more time and cause an ultimate loss. 



For Paper Box Manufacturers 145 

However much we may like to think otherwise, it 
is unquestionably true that the only safe measure of the 
output of any process is the average for the factory or 
division. We like to think that we have highly efficient 
people. We may have them, but their effect is only to 
raise the average. The fact remains that the average 
output is the measure of capacity. 

Classifications of product can be made to get the 
average output per hour of different classes of boxes, 
but classes of employees cannot safely be made to get 
the difference in cost of the same operation when per- 
formed by different classes of help. The class in which 
the box belongs will not change between the moment of 
making the estimate and the time of making the finished 
boxes. But there is no certainty that the work can be 
given out in the factory to the class of help which the 
estimator had in mind. The human factor is very un- 
certain, but the average is safe. 

The illustration given will apply to any and all opera- 
tions or processes in the factory, and is not nearly so 
cumbersome as it may appear to the reader from the 
time required to describe it. 

In actual practice the cost clerk furnishes to the esti- 
mator, each month, a schedule of the operations, with 
the cost per hour of each, also the output per hour of 
each on such classifications of product as have been au- 
thorized. A column" is provided with its heading space 
marked "1,000." The estimator uses the column for re- 
cording the cost per thousand of the item under the 
costs of the current month and thereby saves the neces- 
sity for figuring the same data twice in the same month. 
For example, in the calculation shown, the cost of stay- 
ing 20,000 pieces of the medium class was found to be 
$19.20. The cost per thousand pieces therefore is $.96. 
The estimator has but to enter under the "1,000" rate $.96, 
and when he has occasion again to refer to the data, he 
can use the rate instead of making the calculation. 

If desired, the clerks can calculate the rates per thou- 



146 Manual of Cost Engineering and Estimating 

sand, and furnish the sheet with the rates prepared. Old 
rates should only be used until new data can be de- 
termined. As previously stated, an error of a cent in a 
cost rate will run into many dollars in a month because 
of the multiplication of the rate. An error in the result 
of a calculation is of far less importance. 

Estimating is pricemaking. Pricemaking is one of 
the most important functions of management. The 
profitableness or unprofitableness of the business hinges 
largely upon the selling prices being high enough to yield 
a satisfactory profit. Not too high, lest the business be 
driven to the competitor. There is a point which insures 
fairness to all. 

The cost system provide^ the data for estimates 
which will be fair, and, when the product has been made, 
serve as a test of the correctness of the work of the esti- 
mator. 

For this reason, the estimating blank of every factory 
should be designed to correspond in every detail with 
the plan of the factory cost system. 

Every factory differs in the personal characteristics 
of the people comprising its organization, in the kind and 
amount of equipment, in the character of product it is 
designed to produce, and in its methods of operation and 
routing of orders. 

It is, therefore, as impracticable to undertake the 
adoption of uniform estimating forms as it would be to 
adopt uniform cost system forms. In many cases the 
design would be inadequate, in others it would be very 
cumbersome. 

Certain fundamental requirements should be consid- 
ered, however, in all estimate blanks. Each should be 
designed to cover as far as possible every detail which 
might be required. Nothing should be left to memory. 

Every kind of material used, or likely to be used, 
should be designated. The order in which they appear 
should coincide closely with the probable order in which 



For Paper Box Manufacturers 147 

they will be applied in production. Columns or spaces 
should be provided for quantities and prices. Descrip- 
tions should be as complete as necessary for the proper 
requisitioning of materials from the stock room of pur- 
chasing department. 

Provision must be made for the extension into col- 
umns for totaling all of the items of expense. If the 
stock room expenses are not covered in the price of arti- 
cles, provision must be made for it to be included in an 
equitable manner. 

Under the "Operations" heading should be listed 
every operation for which provision has been made in 
equipping the plant. Wherever classifications have been 
made because of the time requirements due to dimensions 
or other causes, provision should be made for indicating 
the classification considered by the estimator. 

Carelessness and haste should never be tolerated in 
the making of estimates, yet there is no part of the paper 
box business that is less carefully accomplished and 
checked today than the vital pricemaking feature. 

In the workrooms foremen are employed to direct 
the workmen and see that they do their work correctly. 
Throughout the factory a superintendent serves to see 
that the product is made according to the specifications, 
and to coordinate the efforts of the various departments. 
Salesmen serve as scouts throughout the community, or 
the country, to get orders on which the factory forces can 
be employed. If the salesmen, untrained and unchecked, 
as well as ignorant of the vital factory data, do not them- 
selves make the prices at which the product is sold, the 
prices are usually made in the office by some one whose 
authority exceeds his information, without a single test 
of the accuracy of his work. 

The cost system shows instantly, when an order is 
completed, the amount of the cost of the product. It also 
shows the amount of the profit or loss, on the order, at 
the price which was made. It follows therefore that if 
the estimate blank is designed to correspond in every 



148 Manual of Cost Engineering and Estimating 

essential detail with the cost memorandum, or job 
record, comparison will be facilitated. 

The work of the estimator can and should be checked 
as closely, if not more closely, than that of any other per- 
son in the institution. Even though the manager him- 
self serve in the capacity of estimator, the checking of 
the estimates should be an important part of a rigid 
routine. 

The fact that in few instances are there any means 
of checking the efficiency of the management is re- 
sponsible for the fact that there are so few really com- 
petent managers. Authority without responsibility leads 
to autocracy and inefficiency. 

The inefficient manager abhors criticism. His little 
head is turned by the unmerited authority of his position. 
He reports to nobody. He endeavors to make up in 
boastful bluffing what he lacks in efficiency. He derides 
records, calling them "red tape." 

He is the enemy of the cost system, because he is not 
big enough mentally to grasp its value and to apply the 
information which it provides. He places self interest 
and personal pride above the good of the business to 
which he looks for his bread and butter. The showings 
of losses prick him like the needles of the cactus prick 
the desert wayfarer. He hates them. He thinks by 
stifling them to hide the truth. 

He will allow twenty-five per cent of the effort of 
factory employees to be wasted on unprofitable work 
through his own mismanagement. But he declines to 
employ a clerk on records which will yield a large re- 
turn by showing up and eliminating waste. He dare not 
face the records of his management, 

The efficient manager is never puffed up with the 
importance of his position. He takes the serious view 
that authority and responsibility go hand in hand. If he 
is responsible to nobody else, he is responsible to his own 
conscience. He must succeed in order to maintain his 
own self respect. He courts criticism because he knows 



For Paper Box Manufacturers 149 

that it is only by learning his weaknesses that he can 
strengthen the weak points. Improvement comes through 
criticism, never through praise. He compares the records 
of today with those of yesterday, of this month with last, 
and with the corresponding month of last year, and of 
previous years. He must advance, and the rate of ad- 
vancement must increase. He examines every cost sheet 
for profit — the life blood of business. If he does not find 
it in proper degree he compares the estimates with the 
cost to find the error. 

The weakness may be in the estimate. It may be in 
the factory. It is his business to know where it is and 
to see that it does not occur again. He makes it his 
business. 

The efficient manager does not risk his business suc- 
cess through dependence upon the partial information 
which he can get from personal observation at such times 
as he goes into the factory. He wants definite informa- 
tion. He gets it through a system of factory records 
which serve him as a hundred eyes in a hundred places 
could not. The records can be compiled and compared. 
Present performance can be compared with past per- 
formance. Present hour costs and present production 
costs can be compared with those of last month or last 
year. There must be gain. Apathy must give way to 
activity. Industry must succeed indolence. Waste, either 
in material, time or energy, must not be tolerated. 

In designing estimate forms it is better that they 
include items or operations that are rarely required, 
rather than that such be omitted. Omissions of items 
are more frequent than is ordinarily known. The un- 
known makes little or no impression. In this instance, 
"what you don't know" doesn't hurt you. It causes a loss 
where you had a right to expect a profit. 

The lists of materials, operations, and other data pre- 
sented herewith are not offered as forms of estimate 
sheets. They are merely suggestive of the items which 
should be included insofar as they are applicable to the 



150 Manual of Cost Engineering and Estimating 

business for which the form is being designed. In no 
sense are they represented as complete. 

A careful survey of the factory should be made in 
every instance to make sure that no operations are 
omitted. Merchandise requirements should also be care- 
fully considered lest omissions occur. Nothing is so small 
as to warrant its being ignored. Carefulness pays. 

DATA FOR ESTIMATOR 

Date _.___ 

Customer City State 

Size of Box x __x Cover. . Name of Box 

Size of Packer x _x Cover Style of Box 

Size of Tray x _x 

Size of Frame x x 

Size of Extnsn. ._..x x 

Height of Neck x x 



Materials 



Cost 



Box Sheets- _No._ -Board. _X--@ $.--.Pl. Bk. Pt.. 

Cover Sheets. .No.. .Board. .x__@ $ PI. Bk.Pt.. 

Ends Sheets- _No._ -Board. _x-_@ $____P1. Bk.Pt.. 

Packer Box Sheets. _No._ .Board. _x__@ $ PI. Bk.Pt.. 

Packer Cover __Sheets--No.__Board_-x..@ $ PI. Bk.Pt.. 

Packer Ends___Sheets__No.__Board__x__@ $ PI. Bk. Pt.. 

Ext. Top ._- --.Sheets. -No- _Board__x_.@ $ PI. Bk.Pt.. 

Ext. Bot. __ Sheets— No._ .Board. .x._@ $ PI. Bk.Pt.. 

Trays Sheets. _No._ -Board- _x._@ $ PI. Bk.Pt.. 

Neck Sheets. _No._ .Board. _x__@ $ PI. Bk.Pt.. 

Frame Sheets-_No.__Board-_x— @ $ PI. Bk.Pt.. 

Layers Sheets.. No... Board. _x__@ $ PI. Bk.Pt.. 

Block ... Sheets- _No._ -Board. _x-_@ $ PI. Bk. Pt.. 

Partition Sheets. -No.. -Board- -X--@ $ PI. Bk.Pt.. 

Easel .... Sheets. _No._ -Board. _x__@ $ PI. Bk.Pt.. 

Lining ___- No. of Sheets $ per C Bk.Pt.. 

Paper Box Color $ From No 

Paper Cover Color $ From -No 

Trim Box Color $ From.. No...: 

Trim Cover Color. _ . _$ From. _ _ _; No 

Tray Color $ From No 

Bottom Color $_--_From_-_--.-_-___.---No 

Inside Label Color $ From... _ — ....No 

Tops ... .Color. ___$ From. ... .No 

Corners Color $ From. _____ — __-.__ _No. _ _ . 



For Paper Box Manufacturers 



151 



DATA FOR ESTIMATOR— Continued 



Materials 


Cost 


Extra Strips Color. $ From.. _ No 

Blocks __ Color $ From. _ __ No 

Exts. Bottom Color $ From.. ...No 

Exts. Top Color $ From _ ...No 

Seals Color $___ From No 

Hinges . . .Color. __$ From.. _ _.No. .. 

Padding _ Size. ._ x _ Full Sheet x__ _$ _ 






Lace -No ..Full Length __.x ___$ 

Ribbon. Color _. .Width Length 

Flowers Foliage per bunch Out ._ 

Cloth _ _ Color 





— 


B. B. Cloth .Color. ..Grade. 






Pulls ..Kind Size 






Wood . ... . 






Box _ Paper _ ..Cloth .Wire Metal. . . 

Cover Paper Cloth Wire. Metal 

Packer Box Paper Cloth Wire Metal 

Packer Cover Paper Cloth. Wire Metal 

Tray Paper .. Cloth Wire Metal. 

Frame Paper __ .Cloth Wire Metal 

Wrapping Paper .. Sheets .Pounds 

Twine _ _ 






Paste __ _ _ 






Glue Sq. Inches __ _ 






Total Material. 













Operations 



Hrs. 



Cost 



Scoring Box and Cover 

Scoring Packer Box and Cover 

Scoring Tray 

Scoring Frames 

Scoring Necks 

Cutting Ends Boxes 

Cutting Ends Packer 

Cutting Extension Tops 

Cutting Extension Bottoms 

Cutting Necks 

Cutting Frames 

Cutting Padding 

Cutting Cloth 

Cutting Ribbon 



152 Manual of Cost Engineering and Estimating 



DATA FOR ESTIMATOR— Continued 



Operations 



Hrs. 



Cost 



Cutting Paper 

Corner Cutting Box and Cover 

Corner Cutting Packer Box and Gover. 

Corner Cutting Frames 

Corner Cutting Trays 

Die Cutting Box and Cover 

Die Cutting Paper Top and Bottom 

Die Cutting Extension Top and Bottom. 
Die Cutting Straps 



.Stayer. 
.Stayer. 
Stayer. 
Stayer. 
Stayer. 
Stayer. 



Set up Box Ends 

Set up Cover Ends 

Set up Packer Box Ends 

Set up Packer Cover Ends 

Set up Tray Ends 

Set up Frame Ends 

Set up Partitions 

Strip Box 

Strip Cover ^ 

Strip Neck 

Strip Frame 

Strip Tray 

Strip Extension Top 

Strip Extension Bottom 

Strip Inside Cover Card 

Strip Drop Front 

Corner Box 

Corner Cover 

Trim Edge of Cover Color 

Trim Edge of Box Color 

Top Cover with padding Sheets of Padding. 

Top Cover no padding 

Bottom Box 

Bottom Tray 

Hinge Cloth Paper 

Glue in Neck 

Glue on Extension Bottom 

Glue on Extension Top 

Glue on Top Card 

Glue on Flower and Foliage 

Ribbon Tie and Fasten 

Lace 



Ribbon or Tape to hold Cover — Length Width. 

Ribbon on Tray Length Width. 



For Paper Box Manufacturers 



153 



DATA FOR ESTIMATOR— Continued 



Operations Hrs. 


Cost 


Doming and Embossing . __ __ . 


I 






Sawing Wood ._ ___ _ __ 








Sawing Partitions __ _ 








Nest Partitions, Trays, Frames or Layers 








Lining inside of Box _ __ 




..._ 




Lining inside of Cover . 








Close _ _ ___ 








Nest in Packer and close Packer 








Pack in Cases _ 








Wrapping _ in a package __ 








Hauling _ __ 
















Total Making Expense _ __ ._ _ __ 




Total Material Expense - 




Royalties and Mach. Rentals __ _ - 




Litho Tops __ _ _ . . . .. _ _ 




Wood Cases 


| 


Storage ._ __ 




Selling Expense (when not otherwise included) 




Total Cost 




Selling Price _ - - _ _ .__ 





Remarks 



No fixed rule can be advocated for the paper box 
industry in regard to whether the rates used should show 
the total hour cost, including the wages of the operators; 
or the cost of the operation hour exclusive of wages. 

The author believes that the best results will be ob- 
tained if the total hour cost is used in making estimates. 
But in cases where labor is paid on a piecework basis it 
will probably be best to compile cost figures at rates which 
do not include the wages, adding the wages as a separate 
item. 

A capable engineer should be able, after a discussion 
of this point with the management, to arrange the forms 



154 Manual of Cost Engineering and Estimating 

for either method, or for the making of estimates at total 
hour rates, and determining of cost at hour cost rates ex- 
clusive of wages, plus piecework wages. 

As between the two methods of figuring, there is no 
difference in final results. The total hour cost plan will 
show the cost of the order based upon the average cost 
rate. The composite plan in which the hour cost without 
wages is used for time and piecework wages added as a 
separate item will show the variation between the cost 
of the work as performed by employees of different de- 
grees of efficiency. If this is not desirable, the simpler 
plan is best. 

In any factory where time work prevails, the total 
hour cost rate should be used exclusively, for both esti- 
mating and cost calculations. 

Piecework wages have no relation to any other ex- 
pense of manufacture. Those manufacturers using the 
piecework wages as a basis for charging the "overhead" 
expenses of the factory, because it is easier, are paying 
a big price to avoid the necessity of learning and the effort 
of calculating by more accurate and practical methods. 

No rule has as yet been given for including the ex- 
penses in connection with the carrying of materials. This 
expense must always be considered separately from the 
cost of operating the manufacturing processes. Two 
methods are used, either of which is practical only under 
certain conditions. 

A part of the expenses of materials are related di- 
rectly to value, i. e., insurance, interest, taxes and shrink- 
age. Other expenses have a definite relation to weight 
and bulk, as freight, cartage, porterage, rent of space, etc. 

With any plan of calculation we must always bal- 
ance the cost of the effort against the value of the result 
to determine whether it will prove profitable to make 
the attempt. Such consideration leads us to believe that 
it will not be advisable to use two separate rates on the 
merchandise element, one by percentage on cost to cover 



For Paper Box Manufacturers 155 

the expenses related to value, and the other by the pound 
to provide for the expenses related to weight. 

If the concern makes plain boxes as the bulk of its 
product, it follows that box board is the chief material 
used. The cost of maintaining the stockroom can be rated 
on the ton of board with a reasonable degree of accuracy. 
If on the other hand fancy boxes are made exclusively, 
and the investment in materials is the prime factor, the 
value of the material may be used. 

The cost of shipping room expense and delivery to 
either a local consumer, or a local freight house, can 
usually be carried at a tonnage rate on the board, espe- 
cially in the type of product wherein material expenses 
are fairly chargeable by the ton. For freight shipments, 
both the cost of packing cases and the freight charges, if 
prepaid, are chargeable directly to the order. 

Careful consideration should be given to these points. 
Snap judgment is attended with risk of loss. 

In the Addenda of this book will be found a large 
number of tables and other data of great value to the 
estimator. It will pay the reader whose duties include 
the making of estimates to familiarize himself with the 
scope of this data. He may use it as a means both of 
saving time and avoiding the mistakes incidental to 
hurried calculations. 

There will also be found a schedule of the operations 
of the paper box industry as reported by concerns using 
Cost Engineering Systems, with the cost per hour of each, 
based upon the average of conditions within the plants 
furnishing the data. 

The fairest possible average has been produced by 
combining all of the expenses on any given operation, 
and dividing by the total hours produced within the 
period covered by the expenses. 

The author suggests that the reader get some prac- 
tical first-hand experience in making estimates on the 
time basis, using the production rates and the cost rates 
given. Comparisons of the results of such estimates with 



156 Manual of Cost Engineering and Estimating 

the results of the percentage methods in common use will 
prove interesting. They will also show what changes are 
likely to occur with the introduction of the more modern 
and scientific method into the reader's factory. 

But the reader is warned that the costs as shown in 
the composite average may differ greatly from the actual 
costs in his own factory. He should not assume that the 
production rates and costs can be used in his own case 
without careful consideration of all the facts. 

In any event those who are using a percentage on 
labor at present will not be likely to make matters worse 
by using the rates. Percentage methods are so notori- 
ously unreliable that no confidence can be placed in them. 



CHAPTER THIRTEEN 

Selling Prices 

Selling Prices of Paramount Importance — The Bugaboo of 
Fear— The Buyer's Trick— Futility of Efforts to Destroy Com- 
petition — Price Agreements — Introspection Overlooked — Cost Ef- 
ficiency and Management — The Right Price — Basis of Prices in a 
Seasonal Business — The Fundamentals of Price Making — Natural 
Price and Cost — Market Price — Supply and Demand — Selling 
Plows under Free Competition — Effect of Volume of Production 
on Prices — Prices should Rise and Fall with Costs — Losses by 
Fire and Failures — The Crime of Selling Below Cost — Composition 
of Fair Prices. 

To the majority of paper box manufacturers the sub- 
ject of selling prices is of paramount importance. 

In the mind of the average producer higher prices 
seems at once the panacea for all his economic ills, and 
a desideratum approximating the unobtainable, while the 
fear that his competitor will offer product of equal quality 
with his own at a lower price is the bugaboo that persists 
in causing sleepless nights and fills his days with misgiv- 
ings for the future. 

A large percentage of buyers, realizing the psychology 
of the situation, play upon his fears, and whether they are 
warranted by facts or not, repeatedly tell him that his 
prices are high above all competitors. 

Sometimes, in desperation, he tries to destroy the 
business of his competitor by quoting ruinous prices, be- 
lieving himself capable of standing the strain longer than 
his rival. 

If he succeeds, it is only to see the competitor's plant 
taken over by another of lesser experience, who, mis- 
placing the blame for failure, accepts the profitless prices 
of the foolish manufacturer as his guide in selling. 

Realizing the futility of trying to get prices up by 
fighting his competitors he swings to the other extreme and 
endeavors to gain his end through price agreements. He 



158 Manual of Cost Engineering and Estimating 

meets them in conferences and soon learns that each is 
burdened with the same fears, each facing the same 
problems. 

To all of them the subject of "Selling Prices" looms 
large, overshadowing all other apparent causes of woe. 
Questions of Cost, Efficiency and Management seem minor 
items to their distorted vision. 

They believe that if they could only compel the buyers 
to pay more or go without the boxes, the problem would 
be solved. 

Introspection is so rare a quality that perhaps not one 
in a thousand thinks to look into his own mind for a part 
of his trouble, and into his business methods for the rest 
of it. 

In every group of manufacturers there are always a 
few who are more successful than the average, just as in 
every group there are some who are less prosperous than 
the average. 

The man who blames his competitors for his troubles 
seldom looks at anything except the selling prices, and, 
ridiculous though it seems to the outsider, the more pros- 
perous a competitor is the more certain the critic becomes 
that he is a price cutter. 

It is not impossible that the successful paper box 
manufacturer may make prices lower than his unsuccess- 
ful rival, and yet be prosperous, but if he does, it is certain 
that the cause of prosperity lies in something besides the 
comparative selling prices. 

The facts of Cost, Efficiency and Management are not 
less important than the prices that are made. One manu- 
facturer may get a relatively high price, and lose money, 
while another may sell the same boxes at a lower price 
and make a very satisfactory profit. 

The profitableness of a transaction, or a business de- 
pends upon the relation of expenditures to receipts, not 
upon the relation of the estimate (guess) of one manu- 



For Paper Box Manufacturers 159 

facturer as compared to that of another, as to what 
product should be sold for. 

The prime factor in making prices is the Cost. Cost 
is vitally affected by the factors of Efficiency and Manage- 
ment. 

Price agreements cannot possibly prove effective in 
solving economic problems or in the creation of profits, 
because they cannot reach or influence the factors of Cost, 
Efficiency and Management. 

Price agreements are illegal, and rightly so. Price 
agreements if permitted would breed careless business 
methods and encourage dishonesty, so that the resultant 
state of affairs would be worse than at present. 

The right price for any item of product is one that not 
only covers all of the expenses of production but includes 
a reasonable reward for the producer in the form of a 
margin of profit, and takes into consideration the range of 
fluctuation in expenses and conditions incident to the 
business. 

While all selling prices, to be fair, should have as 
their basis the cost oi production, such cost is not neces- 
sarily the immediate expenses of such production. 

In a seasonal business, such as the paper box industry, 
the basis of the selling price should be the average cost. 
The average cost must be determined by the inclusion 
within the data of every expense item required by a 
definite class of units during a period of such length as 
will include the full range of variableness of the condi- 
tions of production. The total of the expenses is then 
divided by the number of such units produced in a co- 
incident period. 

Even when correctly determined the cost of produc- 
tion developed in one factory can be compared with that 
of another factory only by consideration of all of the 
factors including those of efficiency and management. 



160 Manual of Cost Engineering and Estimating 

This subject is as old as trade, yet because the com- 
mercial world has not accepted and agreed upon its prin- 
ciples, it is always a live topic for discussion. 

The fundamentals were clearly set forth in a work 
entitled "The Wealth of the Nations," by Adam Smith, 
published in 1776. Some extracts from his work with 
very enlightening comments are included in a recent 
book, "The New Competition," by Arthur Jerome Eddy. 

The following quotations are taken from Mr. Eddy's 
book, and are worthy of careful study: 

. "What is a fair price? 

" 'Cost plus a reasonable profit,' the seller will 
answer. 

"But the average buyer will quickly reply, 'I do not 
care anything about your cost or your profit, the only price 
that interests me is the market price — the price I have 
to pay.' 

" 'But,' the seller urges, 'the market price may be 
either far above or below a fair price, it may yield me an 
exorbitant profit, or it may mean a disastrous loss.' 

" 'I can't help that.' 

" 'Yes, you can, to some extent; if buyers will only co- 
operate with sellers to control as far as possible the violent 
fluctuations that are bad for both.' 

"And the practical question is, to what extent can 
that be done? 

"A great many writers have dealt with the subject of 
price, but all that has been written on the theoretical side 
since the days of Adam Smith has been but little more 
than refinements upon the conclusions reached by him in 
Book I of his famous work. 

"Natural Price and Cost — 'There is in every society or 
neighborhood an ordinary or average rate, both of wages 
and profit in every department * * * There is like- 
wise in every society or neighborhood an ordinary or 



For Paper Box Manufacturers 161 

average rate of rent. * * * These ordinary or average 
rates may be called the natural rates of wages, profit and 
rent, at the time and place in which they may commonly 
prevail. 

" 'When the price of any commodity is neither more 
nor less than what is sufficient to pay the rent of the land, 
the wages of the labor, and the profits of the stock em- 
ployed in raising, preparing and bringing it to market, 
according to those natural rates, the commodity was then 
sold for what may be called the natural price. The com- 
modity is then sold for precisely what it is worth, or for 
what it costs the person who brought it to market, for 
though in common language what is called the prime cost 
of any commodity does not comprehend the profit of the 
person who is to sell it again, yet if he sells it at a price 
which does not allow him the ordinary rate of profit in 
the neighborhood he is evidently a loser by the trade; 
since by employing his stock (capital) in some other way 
he might have made that profit. 

"Market Price — 'The actual price at which any com- 
modity is commonly sold is called the market price. 

" 'The market price of every particular commodity is 
regulated by the proportion between the quantity which is 
actually brought to market, and the demand of those who 
are willing to pay the natural price of the commodity, or 
the whole value of the rent, labor, and profit, which must 
be paid in order to bring it thither. Such people may be 
called the effectual demanders, and their demand the 
effective demand; since it may be sufficient to effectuate 
the bringing of the commodity to market. It is different 
from the absolute demand. A very poor man may be 
said in some sense to have a demand for a coach and six; 
he might like to have it, but his demand is not effectual 
demand. 

"Supply and Demand — 'When the supply of any com- 
modity falls short of the effectual demand' some will be 
willing to give more than the natural price and 'a com- 



162 Manual of Cost Engineering and Estimating 

petition will immediately begin among them, and the 
market price will rise more or less above the natural price, 
according as either the greatness of the deficiency, or the 
wealth and wanton luxury of the competitors happens to 
animate more or less the eagerness of the competition. 

" 'When the quantity brought to market exceeds the 
effectual demand, it cannot be all sold to those who are 
willing to pay the whole value of the rent, wages and 
profit, which must be paid in order to bring it thither. 
Some part must be sold to those who are willing to pay 
less, and the low price which they give for it must reduce 
the price of the whole. The market price will sink more 
or less below the natural price, according as the greatness 
of the excess increases more or less the competition of the 
sellers, or according as it happens to be more or less im- 
portant to them to get immediately rid of the commodity. 
The same excess in the importation of perishable, will 
occasion a much greater competition to get rid of, than in 
that of durable commodities. 

" 'When the quantity brought to market is just suf- 
ficient to supply the effectual demand and no more, the 
market price naturally comes to be either exactly, or as 
nearly as can be judged of the same with the natural price. 

" 'The natural price, therefore, is, as it were, the cen- 
tral price, to which the prices of all commodities are con- 
tinually gravitating. Different accidents may sometimes 
keep them suspended a good deal above it, and sometimes 
force them down even somewhat below it. But whatever 
may be the obstacles which hinder them from settling in 
this center of repose and its continuance, they are event- 
ually tending toward it.' (The italic and words in pa- 
renthesis are Mr. Eddy's.) 

"Adam Smith's definition of a fair or "natural" price 
is as good as any that can be found in so many words, but 
while the paragraphs referred to seem to lead to definite 
conclusions because they are precise in terms, careful an- 
alysis shows they are little more than graphic descrip- 



For Paper Box Manufacturers 163 

tions of what takes place under the eyes of every house- 
wife who buys of her grocer. She pays the price asked 
for the things she wants; whether that price covers cost 
or not she does not know or care, all she knows is that if 
she sells eggs she receives what she thinks is the highest 
market price, if she buys butter she pays what she thinks 
is the lowest market price — she may find out too late that 
prices vary considerably in the next street, or that a 
neighbor the same day received more for her eggs and 
paid less for her butter. 

"The 'Wealth of Nations' was published in 1776. Let 
us skip a century and a quarter and see what, if any, ad- 
vance has been made over Adam Smith's propositions. 

"A recent writer," President Hadley of Yale, sums up 
the law of supply and demand as follows : 



" '1 



'1. As the price of an article increases, the quantity 
demanded tends to diminish and the quantity offered 
tends to decrease. There will thus in ordinary cases be 
a certain price which 'clears the market' and makes the 
two equal. 

" '2. This price will, theoretically, be reached by 
competition. For so long as the supply is in excess of 
the demand, sellers will be in danger of having unsold 
goods left on their hands and will compete to bring prices 
down; but if the demand is in excess of the supply, buyers 
will be in danger of having wants unsatisfied, and thus 
competition will force prices up, thus producing an equa- 
tion of the supply and demand. 

" '3. The prices thus fixed tend to be proportional to 
the expense of producing the several articles in the mar- 
ket. For if the market price of one article offers a higher 
rate of profit than the market price of another, investors 
will gradually abandon the production of unprofitable 
goods, and put their capital into the line which promises 
the higher rate, thus increasing the supply and diminish- 
ing the price at which it can be sold. 



164 Manual of Cost Engineering and Estimating 

" '4. The equation of supply and demand is thus a 
double process. First, a temporary adjustment of the 
demand to the supply by the commercial competition of 
merchants, which lowers (or, in the converse case, raises) 
the price until it corresponds to the marginal utility, i. e., 
until it becomes just worth while for customers to take 
the whole supply at the price in question. Then there is 
a more permanent though less accurate and universal ad- 
justment of the supply to the demand, by the individual 
competition of investors, which lowers, or raises, the price 
until it becomes proportionate to the marginal expense 
of production, i. e., until it becomes just worth while for 
producers to meet the whole demand at the price in 
question. 

" 'This is the theory of supply and demand as de- 
veloped by the English economists from Smith to Cairnes.' 

"From the foregoing summary of the work of a cen- 
tury and a quarter it is plain the theory of supply and de- 
mand and of a price has not advanced a hair's breadth 
beyond that formulated by Adam Smith; subsequent 
writers have simply rung the changes on the theme fur- 
nished; his comparatively simple propositions have been 
almost lost in a wealth of ingenious refinement. He was 
content to describe things as he saw them and formulate 
certain general propositions; his successors, most of them, 
have retired from the market place, from actual observa- 
tion of daily happenings, and in the seclusion of the closet 
attempted to reduce his generalizations to mathematical 
propositions and give them a semblance of laws. 



"When Adam Smith said, 'It is to the interest of all 
those who employ their land, labor, or stock, in bringing 
any commodity to market, but (that) the quantity never 
should exceed the effectual demand; and it is to the in- 
terest of all other people, that it never should fall short 
of that demand,' he was very close to the human, the vital 
side of the problem he was discussing but he did not follow 



For Paper Box Manufacturers 165 

the matter further, and from his day to this scarcely an 
economist has devoted time and thought to the really great 
problem of intelligent control of so called 'economic laws.' 

"If it is to the interest of the community that supply 
and demand should be maintained as nearly as possible 
in a state of equilibrium, then it should be the business of 
the community to devise ways and means for controlling 
the violent fluctuations due to free competition. 

"In every country town the prices of small products of 
the farm are the result of 'free competition.' When the 
weather is fair farmers 'come to town' in such large num- 
bers and bring so much to market the prices drop to ab- 
surdly low figures; when the weather is bad little is 
brought in and prices go up to absurdly high figures. One 
year there is a shortage of crops and prices soar, the next, 
under the incentive of the high prices of the year before 
a large acreage is planted, the season is good, crops are 
abundant, and prices drop to a level that yields many 
farmers less than cost. 

"What are farmers doing to help these conditions? 
Are they meekly submitting to the 'law' of supply and 
demand ? Are they content with the doctrine of 'free com- 
petition?' Not at all; they read and are guided by govern- 
ment crop reports; they are forming cooperative societies 
to control competition, to introduce rational and scientific 
supervision over both production and marketing to the 
end that prices may be more sable and returns more con- 
stant. 

" 'Market price' is a statistical proposition, it has no 
real, no tangible existence aside from tables of averages. 

"What an article sells for is its price, whether it is 
the market price for similar articles depends upon an 
average struck from a number of sales. 

"Tables of averages and variations are of value; they 
furnish data not only for conducting business, but for con- 
trolling competition. They should be compiled for every 
industry and every locality, and carefully studied. To a 



166 Manual of Cost Engineering and Estimating 

certain extent the government does this, but on so large 
a scale the figures, when published, are of little real as- 
sistance to the individual farmer and manufacturer, they 
do not help him to make up his mind what he should do 
next week, next month. 

"The prevailing price for certain plows may be $20.00. 

"Three makers supply the market, and the plows they 
make are so alike it is immaterial to users which they buy. 

"Each plow costs A, a newcomer, with his smallest 
plant, $20.00 to make; B, with a larger output, $19.00; C, 
with a very large output, $18.00 — what is the fair price 
for those plows? 

"At $20.00 it is but a question of time when A will go 
out of business; B is making only fair returns on his in- 
vestment; C with his larger output is making large profits. 

"If A goes out of business the price of plows will ad- 
vance materially; if he is to remain in business they must 
advance. 

"Under free competition A hovers on the edge of 
bankruptcy; if he closes down temporarily, plows advance 
to $21.00 and he immediately starts up, when the price 
drops again to $20.00. He is on the ragged edge of in- 
dustrial starvation. 

"This is no fanciful illustration. It is the normal con- 
dition of the industrial and commercial world; it is the 
condition described by Smith; it is the 'margin of cultiva- 
tion' of Ricardo and writers upon agriculture and rents; 
it is recognized in the phrases 'marginal increment,' 
'marginal utility,' etc. 

"Under free competition fluctuations in supply and 
demand are sudden and wide, as the most cursory study 
of price charts demonstrates. 

"The inevitable result is that the margin of instability 
in every occupation and industry is very wide, wide in 
direct proportion to the freedom of the competition, nar- 
row where competition is controlled. 



For Paper Box Manufacturers 167 

"The practical question for the community to con- 
sider is whether it is better to broaden this margin of in- 
stability — of loss and disaster — by encouraging still 
greater freedom and recklessness of competition, or nar- 
row the margin of instability by controlling competition. 

"Is it to the interest of the community that plows 
should be sold at $20.00 until A is ruined and then go to 
$22.00 or $24.00, where possibly they were before A 
started in; or is it not to the interest of the community 
to pay $21.00 and keep all three makers in business? 

"The merchant must provide floor-space, goods, sales- 
men, delivery wagons sufficient to take care of his custom- 
ers during 'rush' hours and busy seasons, otherwise he 
loses trade. 

"The manufacturer must provide plant and facilities 
to meet the demands of his trade during perhaps three 
busy months of the year, and one good year out of three 
or four. 

"What is the inevitable result of the tendency in every 
industry to expand to meet the requirements of 'boom' 
times ? 

"In all years except those of maximum demand, ca- 
pacity so far outruns the market that fifty or seventy-five 
per cent is idle. 

"Nothing is more common than to hear the complaint 
mournfully reiterated by intelligent manufacturers. 

"The trouble is there is too much capacity, too many 
mills. 

"Yes, but when the peak load comes every mill works 
night and day and the same men spend millions in ad- 
ditions, only to shut down in a few months and relapse 
into the chronic condition of over-capacity. 

"If the demand for manufactured goods were con- 
stant from j^ear to year, there would be no need for over- 
capacity, but as the demand is not constant in any in- 



168 Manual of Cost Engineering and Estimating 

dustry the over-capacity necessary to meet the peak-load 
is a normal condition. 

"Railroads must have tracks, cars and equipment to 
take care of 'bumper crops;' if they fail farmers make 
their complaints heard in legislatures and by railroad 
commissions — laws are passed, fines imposed. 

"Iron and steel companies must maintain hundreds 
of millions in idle furnaces and mills, waiting for the 
'boom' that is years in coming; if they do not, and prices 
soar as the result of unexpected demand, the consumer 
complains and makes his complaints heard in the press 
and before investigating committees. 

"So wasteful and improvident is the economic organi- 
zation of modern society that to meet its demands, to 
carry its peak loads — many due largely to whims and un- 
restrained impulses — a large percentage of the capital 
and labor in every industry, practically every occupation, 
must be maintained in idleness from a quarter to three 
fourths of the time. And so indifferent is society to its 
moral and econimic obligations during these periods that 
it sees capital rust and labor starve with callous indif- 
ference, complaining bitterly if both are not ready to re- 
spond when the stress comes, when the community ex- 
periences what is fundamentally a psychological condi- 
tion — the 'buying fever.' 

"Generally speaking prices of farm products rise and 
fall with cost, while prices of manufactured goods rise 
and fall inversely to cost. 

"The one is a normal and sound response to condi- 
tions, the other is an abnormal and unsound response. 

"If crops are short the cost per unit — per bushel — is 
high and, other things being equal, prices are high; and 
vice versa if crops are abundant. 

"If the output of manufactured goods is low, cost per 
unit is high, but prices are low, and when the output of 
goods at the maximum cost is low and prices are high. 



For Paper Box Manufacturers 169 

"To verify these propositions by appeal to statistics 
would involve an exhaustive analysis of market condi- 
tions throughout the world, for prices of staple agricul- 
tural products in a given country are affected not only by 
the output of the country but by the crops and market 
conditions in all other countries; but every farmer and 
every manufacturer knows the truth without going beyond 
their own personal observations. 

"The farmer knows that if on the same acreage and 
with the same labor he produces but two bushels of wheat 
where the year before he produced three, his cost per 
bushel is higher, and if farmers throughout the country 
have had no better success, the price of wheat will be 
higher, how much higher will depend a good deal upon 
crops in other countries. 

"Per contra if the same acreage and labor yield five 
bushels as against three the year before, the cost per 
bushel is lower, and, other things being equal, the price 
will be lower. 

"The manufacturer faces the exact reverse of these 
conditions; his prices move inversely to his costs. 

"It being conceded that a fair price should cover 
legitimate cost plus at least some profit, it follows that 
prices should vary with cost and thus ordinarily be 
higher when the output is low and vice versa. 

"But — as noted by Adam Smith — the exact reverse 
obtains. As demand falls and output is curtailed prices 
invariably fall. 

"The condition is a curious illustration of the ten- 
dency of men to accept as right and natural any evil, 
however great, if it is of long duration. 

"That prices should drop as cost advances and rise as 
cost drops is a fundamentally unsound condition, yet be- 
cause such has been the result of the old unrestricted com- 
petition from time immemorial, the very people who suf- 
fer most, employers and employees, tamely acquiesce. 



170 Manual of Cost Engineering and Estimating 

"If the community were organized on a socialistic 
basis, prices would rise and fall with cost; the state would 
not commit the folly of selling goods cheaper and cheaper 
as they cost more and more, nor would the people permit 
the state to charge higher and higher prices as costs 
dropped lower and lower. 

"In cities that make any pretense of managing their 
gas or water plants on a business-like basis, charges for 
gas and water rise and fall with cost of the service; in the 
best municipal plants this is the case, and in no municipal 
plant are prices advanced as consumption increases and 
costs drop. 

"Why should not the same rule obtain in private en- 
terprise? Why should not men be encouraged to co- 
operate to control the ancient 'law' of supply and demand, 
and keep prices as constant with relation to cost as cities 
try to do in their industries? 

"It will not be long before the country will recognize 
its obligations, economic and moral, to men — employers 
and laborers — who in response to the needs and desires of 
the country hold themselves and all they have in readi- 
ness to supply the maximum demand, the peak load. The 
country will nofbnly permit them to, but will insist they 
shall get at all times fair prices for products and ser- 
vices, and fair prices mean prices which cover all risks 
and losses incidental to the enterprise through both good 
times and bad. 

"If, by way of illustration, an association of manufac- 
turers of staple goods steadily advance prices as output 
fell off and costs advanced, how long would it be before 
buying would begin again? 

"It may sound paradoxical to say buying would be 
stimulated by advancing prices, but it always is under 
normal conditions; it is human nature for a man to buy 
when he sees prices are going up and thinks they are go- 
ing up higher; it is also human nature to stop buying 
when he sees prices dropping and thinks they are going 
lower. 



For Paper Box Manufacturers 171 

"There is, of course, always a point at each extreme 
where the tide turns, but, generally speaking, there is 
nothing so stimulating to buying as a rising market, noth- 
ing so discouraging to buying as a falling market. 

"In fact, the rising market is largely due to the stim- 
ulated buying, and the falling market is largely due to 
the holding back of buyers, each waiting until he thinks 
the bottom is reached. 

"The arbitrary adjustment of prices to cover costs 
would do more than any other one expedient to stabilize 
prices and keep the market at a constant level. 

"With prices adjusted to costs, buyers would know 
that every decrease in demand would mean higher costs 
and higher prices — hence, there would be no object in 
holding off; on the contrary, there would be every in- 
centive to buy and restore the equilibrium. 

"Business will not be on a sound economic basis until 
prices rise and fall with costs. 

"The word 'fair' in connection with prices lacks vir- 
ility; it not only admits but invites debate; it suggests pos- 
sibilities of variations. 

"A fair price is a right price, and the right price de- 
pends upon conditions that are susceptible to scientific 
investigation. 

"Price is fundamentally a scientific proposition. 

"The scientific side of cost has long been recognized. 
Men are being taught slowly but surely that cost is not 
the haphazard proposition our fathers supposed it was, 
a mere matter of adding together all of the outlays and 
calling the total 'cost.' The problem of cost is receiving 
profound consideration, and its difficulties are beginning 
to be appreciated. * * * 

"As the problem of cost, which is of first and funda- 
mental importance, is worked out, the question of price 
naturally follows. 



172 Manual of Cost Engineering and Estimating 

"Whether a man shall be permitted to add little or 
much to his cost by way of profit, one thing is certain, 
the right price never falls below cost. 

"The community has a direct and vital interest in 
maintaining prices above cost. 

"When a man is detected selling goods below cost his 
conduct should be as promptly and rigidly investigated 
as if he were detected in secreting goods to defraud his 
creditors — the offenses are akin. 

"When a merchant, a manufacturer, or a farmer 
fails the public looks upon his misfortune as his own, and 
passes on. 

"This indifference of the community to the pros- 
perity of its units is a curious phenomenon, for one would 
think that the whole would realize its welfare depends 
upon the welfare of its parts, and every unit which fails 
to support itself is a burden upon the other units and a 
debit against the resources of all. 

"The man who watches his neighbor's house burn and 
congratulates himself that his own has escaped, seldom 
stops to think that, while the loss falls in the first in- 
stance on his neighbor, secondly on the insurance com- 
panies, if there be insurance, the real loser is the com- 
munity; if there is insurance the loss will be distributed 
in its rates, but whether distributed or not the country is 
out just that much useful property, property into which 
the time and labor of the community went. 

"The losses due to wasteful and ruinous competi- 
tion, to foolish and reckless investments, to selling below 
cost, are all borne by the community the same as losses 
by fire. 

"In 1910 $214,000,000 worth of property was destroyed 
by fire in the United States. In the same year there were 
failures with liabilities amounting to over $201,000,000. 
The assets probably did not realize more than a small per- 
centage of that gross amount. 



For Paper Box Manufacturers 173 



"On the face of the reports it appears that the losses 
due to wasteful business methods almost equal losses due 
fires; as a matter of fact they are far greater, for of the 
men who lose in business, and who are driven out by 
competition, comparatively few publicly acknowledge 
their failures and plead bankruptcy. By far the larger 
number manage to pay their debts and retire quietly, but 
because they 'pocket the losses' and say nothing the ef- 
fect upon the wealth of the community is not changed. 

"The peddler who buys a clock for $10.00 and at the 
end of the week sells it for what he paid for it, is out a 
week's time and his support for that period, and the com- 
munity is out the same. 

"When a man inherits $100,000 and invests it in a 
farm or manufacturing business he invests what is nom- 
inally and legally his, but what is in reality part of the 
accumulated capital of the community, capital created by 
the preceding generation; if he loses it all he is no poorer 
than he was when he inherited it, but the community is 
poorer by the hundred thousand plus the waste of time 
and plus, what is the greater consideration, losses due to 
the demoralization of the particular business caused by 
the ignorant and inefficient efforts of the man who failed. 

"In a sentimental way the interest of the community 
in the welfare of its citizens is recognized and asserted 
oratorically and rhetorically, but the time is speedily com- 
ing when this interest will be asserted practically. For a 
long time the community has maintained expensive fire 
departments to prevent and minimize losses by fire; in 
time it will see the wisdom of maintaining departments 
to prevent or minimize losses by failures. As it is now 
this country does its best to aggravate the conditions that 
produce failures; laws are framed that forbid men doing 
the things that prevent failures; recklessness, wasteful- 
ness, inefficiency in business are encouraged, and when 
failure results, as result it must, an easy way of escape 
from individual responsibility is provided by the bank- 
ruptcy law, which says to the man who has lost his own 



174 Manual of Cost Engineering and Estimating 

and his creditors' money and who, by his reckless methods 
has caused far greater loss to men trying to do business on 
a sound basis, 'You need not pay your debts, you are free 
to find other creditors and start in all over, to fail again— 
and as often as you please.' 

"The time will come when the community will take at 
least as much care to prevent failures as fires, and when a 
failure does come it will sift to the bottom the question of 
responsibility. 

"It may yet be made a crime to sell goods below cost. 

"Every man knows that if a clerk in a shop wilfully 
destroys some of the goods he is liable to his employer 
for the full value. 

"If the clerk gives away goods he is also liable for the 
value. If he sells them at a price less than that fixed by 
the employer, he is liable for the difference. 

"If the clerk is told the cost, and told to get the best 
price he can over the cost, and he sells below cost, he is 
liable for the difference. 

"The average clerk in a country store, who has never 
studied law, knows all these things — self-evident proposi- 
tions of common sense and honesty. 

"It is not so commonly realized by officers of large 
corporations that the same propositions apply to them. 
The very magnitude of their transactions tends to make 
them feel they can do as they please with the products of 
their company. 

"Hence it is a common thing to hear officers of cor- 
porations say they are taking business below cost. 

"This may be necessary at times and under excep- 
tional conditions, but the officer of a company who know- 
ingly sells its products at less than cost runs the risk of a 
suit on behalf of the stockholders, and in such a suit he 
would be obliged to convince a court that each sale below 
cost was for the benefit of the company, and if the court 



For Paper Box Manufacturers 175 

should think otherwise he would have to make good the 
difference. 

"Under existing unscientific and vicious competitive 
conditions it may seem necessary to sell goods below cost 
at periods, or in localities, or to particular parties; and so 
confused are our notions regarding what is right in com- 
mercial conduct that it is probable most courts would de- 
cide in favor of officials who answered that they were 
obliged to sell below cost because others were doing the 
same thing — to meet competition; that is the principal 
excuse offered for all tricky, vicious, wasteful things done 
in business, 'I am doing only what others are doing.' 

"That excuse will not hold forever; it is losing force 
rapidly. 

"Any day a wise court, in a suit in behalf of stock- 
holders against officials for selling below cost and causing 
a large loss may say, 'Because officers of other companies 
were doing the same thing is no excuse for you;' you can- 
not even introduce evidence to show that others did the 
same thing; the only question before the court is whether 
there was anything in the condition of your own company 
which made it necessary to dispose of its assets at a large 
loss; it is no answer for you to say that you wished to 
hold the trade, extend trade, or do something else to your 
competitors; only the stockholders, the owners have the 
right to say whether they wish to lose money doing the 
things that you wished to do; as agents and employees, it is 
your duty first of all to conserve the assets of the company 
and not give them away in pursuance of a competitive 
policy you happen to think good because aggressive. 

"If these notions were lodged in the minds of all rep- 
resentatives and officials, the seeming need for selling be- 
low cost, as a competitive device, would disappear, be- 
cause they would be afraid to yield to it, and because they 
would see that in the long run it does not pay."* 

*For Mr. Eddy's suggested remedy for the evils of "free com- 
petition" the reader is referred to his book, "The New Compe- 
tition." 



176 Manual of Cost Engineering and Estimating 

The foregoing quotations, including as they do the 
opinions of such eminent authorities as Adam Smith, 
President Hadley, and Arthur Jerome Eddy, fully agree 
with the contention presented by the author that a definite 
knowledge of the cost of production is of vital and prime 
importance. 

Selling prices cannot be intelligently made without 
definite knowledge of cost, and the recognition and con- 
sideration of part of the expenses as a basis of cost will 
not serve. Cost must be determined by consideration of 
all of the factors or elements in relation to the volume of 
business, and its seasonal nature. 

The day of haphazard and makeshift methods has 
passed. The manufacturer who wishes to stay in business 
must fix his prices upon provable facts, otherwise he is 
not deserving of the confidence of his customers or of the 
community. 

Selling prices are fairest when they include not only 
a reasonable profit above cost of manufacture, but the ele- 
ments of Efficiency of production and Management which 
assure the buyer that the cost has not been inflated 
through careless or extravagant business methods. 



CHAPTER FOURTEEN 
Figuring Percentages and Profits 

Nine Out of Ten Business Men Do Not Know How to Figure 
Profits Correctly — School Textbooks Teach Wrong Methods — How 
Ignorance Cost Contractor $7,500 per Year — Example of Methods 
for Merchandising — How a Paper Box Factory Management 
Fooled Itself — Using Profit on Sales of Material to Operate a 
Losing Factory — Setting Long Price to Permit Several Discounts 
— Rule for Figuring Profits — Examples of Incorrect Rules in 
School Arithmetics — Losing Money While Figuring to Make Profit 
— Comparative Rules for Figuring Expenses, Interest, Dividends, 
and Profits. 

Nine students out of ten leave school without a prac- 
tical understanding of percentages, and how to figure 
profits. 

The fact that textbook writers, school teachers, and 
most business colleges, fail to realize the needs of modern 
business, and blindly follow traditions, is responsible for 
much of the financial trouble in the commercial world. 

In conventions of merchants or manufacturers, which 
have convened for the purpose of studying better busi- 
ness methods, the author has frequently offered the sim- 
plest problems in profit-figuring, supplied cards for the 
calculations, and asked for unsigned examples of the 
methods of determining selling prices which, under cer- 
tain circumstances, would yield a specified rate of profit. 
In no case have more than ten per cent of the replies 
been correct. The most common type of calculation re- 
sults in a loss of more than half of the specified rate of 
profit. 

Few people understand that when they add a certain 
percentage to an amount, and later deduct the same per- 
centage, a deficit occurs. 

Many concerns lose thousands of dollars through 
"long price lists." The employees to whom were given 
the work of preparing the price lists did not understand 
how to figure percentages. 

The reader is requested to analyze carefully the illus- 



178 Manual of Cost Engineering and Estimating 

trations, which follow, to learn the rules which are given 
in this connection that he may avoid the losses sure to 
occur if they are disregarded. 

Illustration No. 1: 

A building contractor, doing a business of about 
$750,000 per year, made all of his contracts by agree- 
ments wherein it was specified that the client was to pay 
all bills for material and labor, as presented, with the 
O. K. of the contractor. The contractor was to furnish 
the plans, secure the workmen, supervise the construc- 
tion, and keep the records for a certain percentage (say 
10 per cent) of the total cost of the building. 

He had been in business on this basis for seven years. 
His custom was to take the total amount of the bills for 
material and labor, divide same by ten, and present his 
claim for the 10 per cent. 

Several of his clients suggested that he was not get- 
ting 10 per cent of the total cost which, of course, in- 
cluded his fees. In a vague way he realized that this was 
true, yet, rather than admit that he did not know how to 
determine the proper amount, he continued to accept ten 
per cent of the face of the bills paid. 

In a case where the amount of the bills for material 
and labor was $4,500, this contractor received as his 
share $450. Had he learned that in any transaction of 
this kind the total is represented by 100 per cent, and 
that he could find the total by dividing the amount of 
the bills by the percentage which they represent (100 less 
the percentage due him, in this case 90), he would have 
found that the total was $5,000, and his share $500 in- 
stead of $450. 

His losses the preceding year, because he was not 
properly taught in school, and was too proud to admit 
his ignorance afterwards, amounted to one per cent on 
more than $750,000, or upward of $7,500. 

According to his theory and estimates, he should 
have had a nice income after paying his draftsmen and 
clerks, but his actual experience was disappointing. 



For Paper Box Manufacturers 179 

Many manufacturers, during times of uncertainty in 
cost of material and labor, take contracts on a basis of 
cost plus a percentage of profit. Not realizing that the 
basis of profit is always the selling price, and never the 
cost, these manufacturers add to the cost, a percentage of 
cost, thereby cheating themselves out of part of their 
profits. 

Illustration No. 2: 

The author has in mind a business where all sales 
are made on commission; direct advertising being the 
only other item of expense incurred to secure business. 
The percentage of commission and the appropriation for 
advertising, which also is a percentage of the sales, to- 
gether amount to 20 per cent of the business done. A 
profit of 10 per cent is considered satisfactory in this 
business. 

As an example of correct methods of figuring the sell- 
ing prices of orders in which goods are made to order we 
will take a case wherein the estimated cost, exclusive of 
advertising and selling expenses, is $610. It is desired to 
know what price to make on the order to cover adver- 
tising and selling, and also yield 10 per cent profit. 

Advertising, selling expense, and profit, are known 
percentages, all having the same basis — selling price. The 
total is 39 per cent of the selling price. Neither amount, 
the commission, the advertising allowance, the profit, nor 
the selling price is known. 

The first three, being percentages of the fourth, can- 
not be known until selling price is determined. All that 
is known is the estimated cost and the percentages of the 
selling price which are represented by advertising, sell- 
ing and profit. These altogether equal 39 per cent. The 
selling price, being the basis, must be represented by 100 
per cent. One hundred per cent less 39 per cent equals 
61 per cent, or estimated cost. Now if the latter, $610.00, 
is divided by 61, the result will be one per cent, or $10.00. 
Setting the decimal point over two spaces to the right 



180 Manual of Cost Engineering and Estimating 

multiplies the amount by one hundred. Now we have 
the selling price— $1,000. Ten per cent of this, or $100, 
is the amount of profit; $290 is the amount allowed for 
advertising and selling commission. 

The method pursued by the majority of business peo- 
ple, and very frequently by accountants, is as follows : 

Cost $610.00 

Advertising and Commission 29%' 176.90 

Total Cost $786.90 

Profit, 10% 78.69 

Selling Price $865.59 

The actual payments for commission and advertis- 
ing appropriation will be 29 per cent of $865.59, or $251.02. 
This amount deducted from the selling price of $865.59 
leaves a remainder of $614.57. No money was lost on the 
order but the amount of profit was reduced to $4.57. 
When business is done on that basis it is not surprising 
that concerns figuring a reasonable profit on their esti- 
mates find themselves without tangible profits at the end 
of the year. 

Remember this rule: 

In all calculations connected with selling expenses 
and profits, the selling price is the basis, and is repre- 
sented by 100%. 

Illustration No. 3: 

In this illustration we will take the case of a paper 
box factory where profits and dividends were badly con- 
fused. One of the principals in this business had spent a 
number of years serving as bookkeeper and accountant 
for another concern which had failed. 

The author was told that the concern was the most 
profitable in the industry, so far as the principals knew. 
They had a good trade which the two principals had de- 
veloped through their personal effort to a point where 



For Paper Box Manufacturers 181 

they had practically no competition with the bulk of their 
customers. 

They boasted a 25 per cent net profit in the preceding 
year, lately closed. To prove that this was true they 
stated that they had within the month paid a 25 per cent 
dividend on their capital stock of $100,000. 

Asked how they had done it, the author gathered the 
following information which is condensed for brevity: 

Capital stock, $100,000 
Sales, $360,000 
Material used, $99,590 
Profits, $27,280. 

Their plan of making prices was as follows: Cal- 
culate the piecework wages on one thousand boxes of 
the description required; multiply the total by the num- 
ber of thousands in the order; add 100 per cent for over- 
head; add the cost of materials; add one-third of the last 
total for a 25 per cent profit on the sale. 

The fact that they were able to pay a 25 per cent 
dividend satisfied them that they had succeeded in mak- 
ing 25 per cent profit for the year. It had not been no- 
ticed that while they had calculated to make 25 per cent 
on sales they had succeeded in making only 25 per cent 
on the capitalization. They confused the percentage of 
dividends on capital with the profits on sales. 

When asked if they had included depreciation in 
their calculations they stated that they had charged off 
their customary 5 per cent. Interest on investment had 
not entered into their calculations of cost or income. 
They admitted the justice of an 8 per cent reserve for 
replacement, to offset the depreciation on plant. Taking 
an additional 3 per cent for depreciation, and allowing 
6 per cent of total investment as interest expense, their 
profits dwindled to $18,940, or slightly over 5 per cent of 
the sales. 

It was easily shown that the addition of one-third to 



182 Manual of Cost Engineering and Estimating 

the cost of the $99,590 of materials used should have 
yielded $33,177 net profit on materials alone. The actual 
net profit being $18,940, it was evident that the factory 
had been operated at a loss which had absorbed $14,237 
of the profit which should have accrued on the materials. 

In this connection remember this rule: 

Interest and dividends are always figured on the 
basis of investment; commissions, selling expenses, and 
profits, on the basis of sales. 

Illustration No. 4: 

With the following example the figures have been 
changed from the actual amounts involved. The simple 
figures presented will make the illustration easier to 
understand. 

In this instance the manufacturer of an article was 
anticipating an increase in the cost of raw material, and 
wished to provide for it in a long price to the consumer, 
from which the retailer could, for the time being, offer 
a reduction of 20 per cent, while making a profit of 50 
per cent. The jobber was to have 10 per cent, while the 
manufacturer wanted 33 1-3 per cent profit. 

This manufacturer had tried to figure the matter out 
by taking the cost of the articles (for example $1.50) and 
adding various percentages. He consulted a certified 
public accountant who was recognized as the best in the 
community, but was unable to find the solution of his 
problem. Every test from the assumed selling prices 
which were tried worked out a result more or less differ- 
ent from the cost. 

When the author was finally consulted the answer 
to this question was quickly determined by following the 
rule that the selling price is always represented by 100 
per cent, all discounts, commissions, etc., starting from 
that basis. The method of calculating follows: 



For Paper Box Manufacturers 183 

Long retail price 100% 

Retailer's discount to consumer 20 

Retail selling price 80% 

Retailer's gross profit 50% of 80% 40 

Jobber's price to retailer 40% 

Jobber's gross profit, 10% of 40% 4 

Manufacturer's price to jobber 36% 

Manufacturer's net profit 33 1-3%' of 36% 12 

Manufacturer's cost 24% 

The amount of the long retail price is now deter- 
mined by dividing the cost ($1.50) by the percentage of 
the long retail price which it represents (24). The 
answer is $6.25. This is proven as follows: 

Long retail price $6.25 

Retailer's discount to customer 20% 1.25 

Retail selling price $5.00 

Retailer's gross profit 50% of $5.00 2.50 

Jobber's price to retailer $2.50 

Jobber's gross profit 10% of $2.50 25 

Manufacturer's price to jobber $2.25 

Manufacturer's net profit, 33 1-3% of 

$2.25 75 

Manufacturer's cost $1.50 

The author has endeavored to make clear to the box 
manufacturer the necessity, under modern conditions, for 
the use of the selling price as the basis (100 per cent) for 
all calculations in connection with expenses of selling, 
commissions and profits. Using one basis for all, avoids 
the confusion incident to the difference between the 
amount of percentage added and the same percentage 
deducted. 



184 Manual of Cost Engineering and Estimating 

For example: 

Taking 100 as the basis; if we add 50 per cent we get 
a result of 150; if we now deduct 50 per cent we get a 
remainder of 75. 

Taking again as the basis 100; if we deduct 50 per 
cent we get as a result 50; if we now add 50 per cent we 
get the result 75. 

This confusion has led to the frequent publication 
of percentages to be added to cost to obtain certain other 
percentages of profit, viz: 

To make a profit of 20 per cent add 25 per cent 

to cost. 
To make a profit of 25 per cent add 33 1-3 per 

cent to cost. 
To make a profit of 33 1-3 per cent add 50 per cent 
to cost. Etc. 

This might be a practical scheme were it not for the 
fact that percentages do not always occur as fifths, or 
quarters, or thirds of one hundred. When they run into 
odd figures it is much more difficult to apply the per- 
centage on the cost, and the probability of misunder- 
standing and errors is greatly multiplied. 

Another complication occurs when two or more per- 
centages occur; as in the case where it is desired to learn 
at what price an article or order must be sold to cover 
a certain percentage for handling expense (rent, insur- 
ance, etc.) on merchandise or materials, a percentage to 
cover cost of selling, and another for profit. 

Reference to the arithmetics in common use will re- 
veal these inconsistencies and the impracticability of try- 
ing to follow their rules in the course of ordinary busi- 
ness. 

The following are direct quotations: 

"Percentage is a term applied to computations in 
which 100 is employed as a fixed measure or standard." 

Under the subheading "Profit and Loss" these state- 
ments are made: 



For Paper Box Manufacturers 185 

"Profit and Loss are terms used to express the gain 
or loss in business transactions. 

"Gains and losses are usually estimated at a rate per 
cent on the cost, or the money or capital invested. 

"The base is the cost, or capital invested." 

Numerous examples are given, showing that the 
theory is that if a man bought a horse for $100 and sold 
it for $150 he would make a profit of 50 per cent. 

Under the sub-heading "Commission" the same arith- 
metic presents the following statements: 

"Commission is the fee, or compensation, allowed 
an agent for transacting business and is usually com- 
puted at a certain rate per cent of the money involved 
in the transaction. 

"The base is the amount of sales." 

Following these statements a number of examples 
are presented wherein the amount of commissions is 
shown to be certain percentages of the sales. 

Theoretically the plan works out all all right, because 
all the examples are simple. Each group is placed under 
the heading of its class. No combinations are presented. 

Suppose the farmer who bought the horse did not 
sell it but engaged an agent to make the sale, at the same 
price but at a commission percentage lower than the rate 
of profit he had calculated, say 33 1-3 per cent. What 
would be the amount of profit remaining to the farmer 
after the sale and payment of the commission? 

The farmer bought the horse for $100, anticipating 
that he could sell it at a profit of 50 per cent, thereby 
making a profit of $50. For some reason he decided to 
engage an agent to make the sale, and thinking to share 
the profit with the agent he offers him 33 1-3 per cent 
commission for his effort. The commission, being based 
upon the amount of the sale, is $50, and the farmer has 
taken a risk and gained nothing. 

Suppose that the farmer had the horse in his stable 



186 Manual of Cost Engineering and Estimating 

for a month at a feeding, or caretaking, cost of $10. He 
would also have to calculate that as part of the cost. 

We now find that the total cost of the horse, includ- 
ing the care, feed, and commission, is $160. The amount 
received for the horse is $150. The loss on the transac- 
tion was $10. 

It is hoped that the foregoing examples have made it 
clear that all items of selling expense, commissions, and 
profits, should be calculated on the basis of selling price, 
and not on the cost. 

The selling price at which an item will yield a cer- 
tain rate of profit is easiest found by dividing the cost by 
the percentage left after deducting the desired profit rate 
from 100. Thus: 

To make 10 per cent, divide total cost by 90. 

To make 11 per cent, divide total cost by 89. 

To make 12 per cent, divide total cost by 88. • 
Etc., etc. 

When this rule is once absorbed it will not be neces- 
sary to keep profit percentage tables handy. 

When there are two or more percentages, as hand- 
ling expense, selling expense, profit, etc., all determined 
on the basis of sales, they should be added together and 
the total deducted from 100 to get the divisor. Never 
use the percentages separately as described in connection 
with Illustration No. 2. 

At the close of a year's business the amount of net 
profit is compared with the total sales to determine the 
rate per cent of profit on the business for the year. With- 
in the total are many items, some of which are more or 
less profitable, while others proved unprofitable. Yet 
it is customary and practical to mention the net earnings 
as a flat percentage of the sales. 

A business amounting to $100,000 which has proven 
to have made a net profit of $18,000 would be said to 
have made 18 per cent. Not 21.95 per cent, as would be 
the case if the calculation were based on the $82,000 



For Paper Box Manufacturers 187 

which covered the cost of goods sold, the selling and 
handling expenses. 

If then it is right to consider profits on total sales 
as a percentage of such total, it is also fair to assume the 
profit on the individual sales as a percentage of the sell- 
ing price, and not as a percentage of the cost. 

Paper box manufacturers who will familiarize them- 
selves with the rules presented herewith, and use them 
in their business will find them a valuable means of cal- 
culation, and an elimination of the losses commonly 
caused by confusion of methods. 

The paper box manufacturer should understand and 
recognize that the expenses of manufacture cannot be 
distributed by percentage, as no basis exists upon which 
the distribution can be equitably made. The commercial 
and selling expenses, however, which must be provided 
for in the margin between making cost and selling price 
can be distributed by percentage. The method of distri- 
bution (on extended values) given in the chapter descrip- 
tive of making the summary of costs, conforms fully 
with the rules given herein in connection with the ex- 
penses of merchandising and profits. 

The cost of handling merchandise in the form of 
both raw and finished stocks is covered by the same rule. 
Make the distinction that merchandise may have to be 
classified according to its nature and a different percent- 
age applied for handling each classification, just as a 
separate expense rate must be found in a department 
store for the expenses of handling various kinds of mer- 
chandise. 

It will be well now to present collectively the correct 
rules for the use of percentages in connection with the 
expenses of the paper box industry: 

(a) Manufacturing Expenses : On account of the ex- 
treme variation in the amounts of various items required 
by the different processes, no distribution by percentage 
is possible. Each item must be charged in proportion to 
its use, or its benefit to the individual process, as ex- 



188 Manual of Cost Engineering and Estimating 

pressed in units by which the item itself, or its use is 
measured. 

(b) Merchandising Expenses: Advertising, selling, 
commissions, rent of storerooms, and all other expenses 
in connection with the sale of the manufactured goods, 
or materials, or articles bought for resale, may be charged 
by percentage of selling price, it being understood that 
where the proportions of such expenses differ to any con- 
siderable degree on different classes of merchandise, each 
class shall be charged with such rate as will cause the 
sales of that class to carry their just proportion of the 
expenses involved. 

(c) Interest is always to be considered at a rate per 
cent per annum of the amount invested. 

(d) Dividends are to be considered at a rate per cent 
of capital stock entitled to participate. 

(e) Profits are always to be considered at a rate per 
cent of the amount of sales. 



CHAPTER FIFTEEN 

The Fetish of Uniformity 

How Organizations are Misled by Unattainable Ideals — Mis- 
taking Mechanism for Principle — Standardization — Principles 
and Arbitrary Standards — Standard or Uniform Cost Systems Im- 
practical — Standardized Costs Interesting But Unreliable — Violat- 
ing the Fundamental of Justice — Relative Value of Uniformity 
Compared to Accuracy — Resolutions Cannot Change Facts — 
Principles Only Basis for Permanent Standards. 

A great deal has been said and written by prominent 
persons about the desirability of uniform cost systems 
and of uniform methods of making estimates. The cause 
of all of this sincere discussion and earnest effort is the 
hope, frequently expressed, that sometime there will be 
uniform prices on a uniform product. 

Whole organizations of men, intelligent, wide-awake 
and commendable, pledge themselves to some scheme 
for uniformity in their craft. They all realize that the 
rule-of-thumb practice of setting prices is the cause of 
most of the difficulties confronting the manufacturer 
today. 

The chief trouble with these gentlemen is that they 
are all laboring under the same delusion. The delusion 
of formula. The mistaking of form for essence. The 
mistaking of mechanism for principle. 

Some bodies of manufacturers have convened in a 
deadly-earnest effort to solve their problems. They act- 
ually put themselves on record as believing that accuracy 
of result was of secondary importance when compared 
with uniformity of method. 

They believed that because some standards have been 
created by agreement, and made permanent by long 
usage, they could formulate their desires into resolutions 
and vote them into practicability, regardless of the funda- 
mentals of the universe. 

In fact one organization, several years ago, after an 
extremely controversial session, in which a bare majority 



190 Manual of Cost Engineering and Estimating 

favored a set or arbitrary rules, had the temerity to pub- 
lish them, and at this writing, still does publish them at 
intervals under the caption ""Fundamental Principles." 

Notwithstanding that the methods advocated violate 
every fundamental of cost, as well as the fundamental of 
justice, the effort at standardization which they have 
made was a laudable one. They were ignorant of correct 
methods and admitted it. Their chief fault was in mak- 
ing no provision for improving their work and assuming 
that to correct their error would destroy their standard. 

Standardization is one of the most important factors 
in modern industrial advancement. It enables people 
engaged in similar lines of effort to "speak the same 
language," interchange ideas, equipment, and products, 

We learn to trust each other through the use of 
standards. We choose or discard our friends by moral 
standards. We agree to standards of weight, measure, 
count, and quality, and judge the honesty of those with 
whom we have business dealings, by the strictness with 
which they respect these standards. Toolmakers stand- 
ardize tools, machine builders standardize machine parts, 
railroads standardize the gauge of track, cars, equip- 
ment, etc. 

Many standards are purely a matter of agreement. 
Others have a fundamental basis which is not subject to 
change at the whim of men. For example: In the mat- 
ter of time, the year, the seasons, the lunar month, and 
the day, are periods over which man has no jurisdiction. 
The calendar month, the week, the hour as also minutes 
and seconds, are man-made terms of time measurement. 
Were men so inclined, they could arrange and agree that 
the day should consist of a hundred hours, the hour a 
hundred minutes and the minute a hundred seconds, 
thereby making these units of time conform to the deci- 
mal system of numerical calculation. But what body of 
men by agreement could affect the length of the solar 
year, the lunar month, or a day? These are fundamen- 
tals as are also the principles of justice and equity, and 



For Paper Box Manufacturers 191 

the law of compensation upon which the science of cost- 
finding is constructed. 

We hear a great deal about standard costs, and 
standard cost systems. Few of the people who discuss 
these matters have troubled themselves to analyze the 
terms, or even to define them. 

As a matter of fact there is no such thing as a stand- 
ard cost. In the nature of industry there cannot be. 
Cost is a result of conditions — the sum of expense fac- 
tors. Unless the expense factors and the conditions are 
constant there can be no standardized cost. 

Standard Cost Systems imply uniformity of cost sys- 
tems. There can be no uniformity of systems unless 
there is uniformity in the plants using them. There can 
be no uniformity of Cost Systems unless the conditions 
of production are the same. 

In one factory the equipment, the class of labor, the 
personnel of the business organization is selected speci- 
fically for the designing, sale and production of high class 
product; orders for skeleton or other cheap grades of 
boxes are not considered desirable. In another factory, 
owing to location within easy access of factories, using 
cheap boxes exclusively, all facilities are developed with 
a view to rapid production of that class. In a shoe-mak- 
ing center many factories specialize only on shoe boxes, 
making large quantities of a limited number of standard 
sizes, labeling and delivering as the various customers 
require the product. 

One factory makes stiff boxes only, another combines 
stiff and folding boxes, a third includes tubes and cans. 
Some may make cigar boxes, jewelry cases, packing cases, 
or fibre shipping cases. Again others include in their 
combinations of product such departments as printing, 
lithographing, photo-engraving, steel and copper-plate 
engraving and printing. 

Average or "standardized" cost developed from data 
secured in such a variety of plants may be very interest- 



192 Manual of Cost Engineering and Estimating 

ing, but should not be relied upon too fully as a basis for 
estimating or selling. 

Expense factors are influenced by conditions. Cost 
is the sum of expense factors, therefore cost can be in- 
fluenced only as conditions can be governed. 

After an item of product has been produced, no 
scheme of figuring can change its cost. No amount of 
discussion of or agreement between manufacturers as to 
methods of calculating cost, can have any effect which 
will increase or decrease the cost. 

Once the production is accomplished, the cost, 
whether known or unknown, is a fact which is incontro- 
vertible, unchangeable and eternal. 

The cost of future lots of product can be affected by 
discussions only when they result in changes of condi- 
tions or methods of production. 

In the past, accountants have differed widely in their 
advocacy of methods of applying overhead expense be- 
cause there were no recognized principles of cost. An 
accountant would not countenance the charging of an 
item of merchandise, purchased by or delivered to one 
customer, to the account of another. Yet, because of his 
lack of knowledge of the principles of expense, he would 
without hesitation charge "overhead" in a manufacturing 
cost system in a manner which will, through its result, 
make the purchaser of one item of product pay expenses 
incurred on account of the production of other items, 
which in turn are received by other purchasers who do 
not pay enough to cover the cost of production. 

This is a clear violation of the fundamental of jus- 
tice, the law of compensation, and the fundamentals 
which experience has demonstrated in connection with 
the distribution of expense. 

Such methods do not determine the cost. They sim- 
ply serve to confuse the ignorant. They are on a par with 
attempting to postpone the sunset by turning back the 
hands of the clock in mid-afternoon. 



For Paper Box Manufacturers 193 

If a thing is not true, nothing that can be said about 
it, or claimed for it, can make it true. 

If a thing is wrong, no agreement between individ- 
uals, or organizations, to treat it as though it were right, 
will make it right. 

Humanity demands truth and justice, and will finally 
accept nothing less. 

The plea that uniformity of figuring methods is more 
important than accuracy may fool the rank and tile for 
a time, but no permanent standards can be built upon 
such a foundation. 

The moment the individual realizes that the standard 
is unreliable, his confidence is weakened, and its ultimate 
rejection is only a question of time. 

The adoption by any organization of a makeshift, in- 
accurate, uniform, or standard figuring system, miscalled 
a "cost system," may seem for a time to serve the pur- 
pose for which it is intended. But when its membership 
realizes its shortcomings the result will be a reaction that 
will not only create distrust, but is likely to cause the 
membership to reject in the future all sincere efforts to 
establish correct methods, thereby destroying the results 
of the good work already done. 

When a theory has been proven incorrect, the logical 
thing is to acknowledge the fault, find a better way and 
get it into use as quickly as possible. Trying to make a 
wrong standard permanent, and to postpone the time 
when the error must be acknowledged, by repeatedly 
passing resolutions of commendation, may create an im- 
pression of sincerity, but it has no effect upon the facts. 

Just as the man who is willing to admit a mistake 
and try to correct it, is a bigger and better man than he 
who tries to perpetuate his error by a strong bluff, the 
organization which seeks the good of its membership, 
and the confidence of the public, must stand ready to 
change its standards quickly whenever they are proven 
wrong, rather than try to shield the authors of error from 



194 Manual of Cost Engineering and Estimating 

the embarrassment which they fear as a result of admit- 
ting their fault. 

In the realm of the experimental, standards can have 
no permanence. They are simply the guide posts which 
mark the limitations of experience at various stages of 
human advancement. When one standard has been sur- 
passed, it is time to set a higher mark and go onward 
toward the goal of perfection. We will probably never 
reach the goal, but that is no excuse for tying to a present 
standard when we can see a better way beyond. 

Human progress has passed the stage where might 
must be recognized as right. No body of men, however 
earnest or influential they may be, can either by majority 
or unanimous vote create accuracy, or permanent stand- 
ards, through practices which violate a single funda- 
mental principle. 

Permanent and practical standards must be based 
upon provable principles, capable of withstanding the 
most rigid analysis, thereby gaining strength with ex- 
perience, rather than destroying the confidence of the 
user. 

The "uniformity" of cost systems, the subject of much 
discussion, is a "fetish." It is an ideal which like the 
desire to live forever, may be present in the mind of 
every individual interested in the subject, yet none can 
ever really hope to attain it. 

The individuality of factories, and the methods pur- 
sued within them, are simply the reflection of the minds 
of those responsible for their operation. As long as men 
retain the characteristics of their individuality, they will 
continue to think and act differently from each other. 
The tools they control, and the things they do, will differ. 

No two factories are alike. No two factories can be 
alike. They might be housed in duplicate buildings. They 
might be equipped with exactly the same machinery, set 
in exactly the same positions. They might be established 
with the same plan of organization, and every position be 
filled by competent persons, yet within a month the in- 



For Paper Box Manufacturers 195 

fluence of their personalities would be such that the 
volume of business would be different; the character of 
the product would be different. All of these things affect 
the conditions of production, and the conditions of pro- 
duction affect the cost. 

Establish within these factories two cost systems 
using identical forms, and operate them efficiently. The 
resultant costs will differ as widely as the conditions of 
operation differ. Uniformity of systems will last only as 
long as the uniformity of the factories last. If the sys- 
tems are to give practical results they must change to 
meet every change in the factory equipment and opera- 
tion. 

The science of numbers is not a subject for discus- 
sion and resolutions by trade bodies. It is founded on 
the principle of the decimal and its practicability is uni- 
versally admitted. 

A story is told of a man who was shipwrecked upon 
an island where the natives knew nothing about the 
science of numbers. One day a wrangle occurred over 
the division of a lot of cocoanuts. The traveler counted 
the cocoanuts and found that there were just one hundred. 
He counted the twenty natives in the wrangling group 
and told them that if each would take five they would be 
equally divided. Finding that he had such wonderful 
skill in administering justice they gave him a high place 
of honor. He knew the fundamentals of numbers. They 
did not. 

If the science of numbers was as little understood 
among manufacturers as is the science of cost engineer- 
ing, it is probable that each man who had worked out 
some experiment with numbers would desire that every 
other one should adopt the formula which he had hit 
upon. If none of them really knew anything of the fun- 
damentals, they might get together and decide that they 
would all follow any formula which the majority favored. 

To follow the analogy further, they might label the 
result of their effort "The Standard Formula of Num- 



196 Manual of Cost Engineering and Estimating 

bers" and decide that since standardization had been 
created by fiat, no change should be discussed at future 
meetings, lest their standard be destroyed, and the onus 
of imperfection be placed upon the sponsors of the 
formula. 

Notwithstanding that a correct method gathers 
strength and increases the confidence of those who use it 
in proportion to their use of it, these sponsors find it 
necessary to ward off attacks upon their so-called prin- 
ciples by passing a new resolution of confidence at every 
meeting. 

Now if a man from the outside offered them the 
fundamental principle of decimal calculation, these spon- 
sors would refuse to listen to him because "standards 
have been fixed and will admit no change, lest uniformity 
be destroyed." The "fetish or uniformity" is placed be- 
fore accuracy, before practicability, before reason, and 
before fundamental principles. These people are more 
stupid than the islanders who gave the place of honor 
to the man who knew the fundamentals of numbers, who 
could see beyond the formula of figures, and use them to 
establish the great principle of justice. 

The science of numbers, the science of accounts, the 
science of salesmanship, the science of costfinding, and 
every other science which has to do with the relations of 
people, must be established upon fundamental principles 
which will not be found wanting when weighed in the 
scales of justice. 

Worshiping a fetish, even the fetish of uniformity, is 
a poor occupation, in a day when active minds are seek- 
ing after truth. The man who puts his faith in a fetish, 
instead of founding it upon the eternal principles of the 
universe, is bound sometime to realize that he has built 
his structure on shifting sand. 



CHAPTER SIXTEEN 

The Psychology of Commercial Success 

All Business is Buying and Selling — Manufacturer a Dealer 
in Time and Materials — Skilled and Unskilled Workers — Selling 
Service — What is Good Will — Individual Independence Impos- 
sible — Psychology, the Science of Mind — Comparative Value of 
Mental and Physical Effort — The Scope of Machinery — The En- 
gineering Age — The Engineer the Man of the Future — The Dis- 
organized Mind and the Orderly Mind — Fear — Mental Effect of 
Cost Sheet — Mental Effect of Untidy Office — A Choice of Partners 
— The Elements of Successful Business. 

All business is buying and selling. Some people have 
said that buying should be done in the cheapest market 
and selling in the highest. That is a superficial view- 
point. 

All kinds of business are governed by the same fun- 
damental principles. The department store manager 
buys different kinds of goods, of different grades, and is 
prepared to furnish his customers with any assortment 
or quantity they may desire. The manufacturer buys 
materials and labor of various kinds, and grades, and is 
prepared to furnish them to his customers in any form 
or quantity desired. 

The merchant deals in units of dry goods, hardware, 
etc., the manufacturer in units of the time of skilled or 
unskilled workmen, and such materials as may be neces- 
sary to create what the customer desires. 

Because the merchant has been trained in handling 
commodities which are resold in practically the same 
form as purchased, he has become accustomed to placing 
a value on every item in his stock. He finds it necessary, 
in order to avoid loss and protect his capital, to see that 
every penny's worth of goods that goes out of his store 
is either paid for in cash or charged to the customer who 
gets it. 

Manufacturing, in the modern way, is much newer, 
and manufacturers have not been drilled in the knowl- 
edge of values as have merchants. Their "goods" are 



198 Manual of Cost Engineering and Estimating 

bought in one form and sold in another. They have not 
learned fully that they must consider time as the most 
important factor in which they deal; that it is just as 
necessary to charge the items of time which the custom- 
ers get as the items of merchandise; that each item of 
time has a value, created not by the wages paid for it 
alone, but by all of the elements of expense involved in 
the process of which the time is a measure, and that it 
is influenced by volume, just as the merchant's cost of 
doing business is influenced by volume. The manufac- 
turer needs the commercial viewpoint. 

Every man has something to sell. He is either a 
salesman or an order taker. The skilled workman is 
a salesman. He has something for which there is a de- 
mand and sells it where he can get the highest price. 
He sets the price. The unskilled workmen has something 
to sell for which there is less demand. He takes the order 
and delivers the low grade goods at the price the custom- 
er is willing to pay. 

The reason a thing can be sold for more than was 
paid for it is because the dealer has added to it some- 
thing that makes it worth more. The added element is 
"service." 

The farmer buys seed from the seed merchant at a 
price which covers not only the cost of the seed but the 
element of service furnished by the merchant in provid- 
ing the stock for the convenience of the farmer. The 
farmer plants the seed, gathers and threshes the grain 
and sells the grain and straw at prices which not only 
cover the cost of the seed and the rental of the ground 
but the element of service which he provided. The com- 
mission merchant buys the straw, and resells it to the 
strawboard manufacturer at a price which includes with 
its cost the pay for the service which made it unnecessary 
for the manufacturer to spend time and money traveling 
through the country buying straw and arranging for ship- 
ment. The board manufacturer changes the straw into 
strawboard, and sells it to the jobber in large quantities 



For Paper Box Manufacturers 199 

at a price which pays for his service as well as returns 
the money which he spent for material and cost of pro- 
duction. The jobber in turn distributes the board to 
paper box manufacturers at a price which covers his cost 
and expenses, and the element of service. The box manu- 
facturer forms it into boxes of the description which his 
customer desires, and receives for it a price which yields 
him a return for the element of service which he renders. 
All commercial activity is made up of buying, selling 
and service. The element that creates real business is 
service. You may buy in a cheap market and sell at a 
higher price, but if the element of service is lacking you 
are not building business. 

Permanent business is built on the foundation of 
good will. Not one man in ten knows what is good will. 
Some men when they sell a business, demand a price for 
good will. Often the good will is only imaginary. Good 
will is the margin of service which was delivered to the 
customer beyond what he was asked to pay for. 

If you sell an article to a customer at a price which 
leaves him with the impression that he paid all or more 
than it was worth you create no good will. But if you 
deliver an article to a customer at the moment that he 
needs it, and it is made so well that he never has reason 
to make a complaint about it, and the price is such that 
he feels that he got a square deal, you have delivered a 
margin of service which will come back to you in future 
business and recommendations of your service to others. 

No man is independent. All the people of the earth 
are dependent more or less upon each other. There must 
be contact with other people in every walk of life. This 
contact is not the contact of body with body but is the 
contact of mind with mind. The better we understand the 
nature and laws of the human mind, the greater is our 
chance of success in selling our services to others at a 
profit. 

Specialists have studied the action of the human 
mind for centuries, and have developed what is called 



200 Manual of Cost Engineering and Estimating 

Psychology, or the Science of Mind. It is a study of the 
mental processes. The salesman should study psycho- 
logy, because his work is that of influencing the minds 
of men to think as he believes they should think about 
that which he has for sale. 

Very few salesmen understand the fundamental laws 
which are the foundation of salesmanship. No man could 
become a great musician who did not study the laws of 
harmony in sound. No man could be a great painter who 
did not study the laws of harmony in color. No man can 
become a great salesman who does not learn the laws of 
sale which are the laws of the human mind. We cannot 
all be musicians; we cannot all be great painters; but the 
musician, the painter, the merchant and the paper box 
maker, must, if they will succeed, be salesmen. 

Just as a plan of life that did not include the training 
of the mind would not be complete, so this book would 
be incomplete if it did not include reference to the study 
that is more universally needed than any other. 

Several years ago, when the writer was in the employ 
of the National Cash Register Co., the president of that 
great concern, who was then drawing a salary of one 
hundred and forty-four thousand dollars per year, said, 
"A man is worth two dollars a day from his chin down. 
Whatever he is worth more than that is due to that part 
of him which is above the chin." His salary was proof 
that there was practically no limit to the value of brains 
properly trained and directed. 

Harrington Emerson, the great efficiency engineer, 
says that physical energy equal to that produced by one 
man in one day can be developed by mechanical means 
at a cost of eight cents. 

Practically anything that can be done by manual la- 
bor can be duplicated with a higher degree of perfection 
and greater uniformity by mechanical processes. The 
number of processes that have not already come within 
the range of machine production is rapidly decreasing. 
Forms of product that formerly required days of the 



For Paper Box Manufacturers, 201 

time of workmen are now produced with greater accuracy 
and uniformity in an instant. The future of the youth is 
not in the skill of hands, but in the training of his mind. 
This is the age of the engineer. Dr. Frank Crane, whose 
editorials are of such general interest that they are pub- 
lished simultaneously by a large number of daily papers 
in all parts of the country, says: 

"The man of the future will be the engineer. 

"He is the man who can Do things; and is better than 
the man who Owns things. 

"The Millionaire is a temporary, passing, makeshift 
product of civilization. He is merely holding things to- 
gether until the people get sense enough to do their own 
owning. 

"Some day little boys will read that the world once 
had millionaires and huge private wealth units, just as 
they will one day read and wonder that men once had 
kings. 

"But the official who will forever be indispensable 
is the engineer. 

"We need the Engineer to arrange the transportation 
of people and goods from place to place, without waste, 
without competition, without graft, looking only to the 
public good. 

"We need the Engineer to get meat, bread, and milk 
from farm to citizen, without the present inefficient tangle 
of trusts and middlemen working at cross purposes. 

"We need the Engineer to turn the profit of public 
enterprises toward building good roads and bridges, in- 
stead of enriching a few shrewd manipulators. 

"We need the Engineer to manage a city as economi- 
cally and smoothly as if it were a manufacturing plant. 

"We need the Engineer to organize the farmers so 
that all can work together for each and their products 
marketed without being preyed upon at every step of 
the way from farm to household. 



202 Manual of Cost Engineering and Estimating 

"Wealth can be taken away from us. But the power 
to Do things cannot be taken away. 

"The Millionaires could go and not be missed. The 
Engineers we cannot spare." 

We are learning that better results can be attained 
in any line when we understand its fundamentals. Spe- 
cialists are devoting their lives to the study of individual 
subjects for the purpose of reducing each to a practicable 
science. 

The Century Dictionary defines science as "Knowl- 
edge gained by systematic observation, experiment and 
reason; what is known concerning a subject, systemati- 
cally arranged." Thus we see that every subject which 
affects the welfare of the human race is being reduced 
to a science. Men are making systematic studies of phe- 
nomena, recording and coordinating the results of their 
experiments and observation. 

The man who fails today has no one to blame but 
himself. Opportunities for study and self-development 
are greater than ever. 

The manufacturer who would succeed must be a 
scientist in his line. He must study what is known of the 
subject, until he has mastered every phase of it. He 
should study the principles of mechanics and their ap- 
plication in the manufacture of his product, if he would 
get the best results from his factory. He must study 
psychology in order that he can deal fairly and amicably 
with his employees. He must study salesmanship if he is 
to direct his selling organization or make the sales him- 
self. He should know all that is to be known about the 
origin and production of the various items that enter into 
his product. He must study costfinding if he is to be able 
to convince others that his prices are intelligently made 
and fair to both himself and his customers. 

The day of muscle is waning. The day of mind is 
dawning. Great men are not great because they have 
great muscles. They are great because they have well 
trained minds. The difference between the successful 



For Paper Box Manufacturers 203 

man and the unsuccessful man is not physical; it is men- 
tal. Pope said, "The study of mankind is Man." We 
have been studying man, and have found that the greatest 
thing in man is Mind. 

The mind of the average man is a disorganized mass 
of impressions gathered throughout an aimless career. 
The mind of the successful man is a more or less orderly 
arrangement of the data which he has gathered in a di- 
rected effort to fit himself for some special work. How 
successful he will be depends upon the choice of data he 
has made and the care with which he has arranged them 
for future availability. 

Many paper box manufacturers are in the business 
simply because they wish to be their own bosses, and 
have no other thought than to earn a livelihood for them- 
selves and their families. They have never studied the 
principles of business, and frequently are found with 
some very mistaken ideas. 

One thinks that if he can keep his factory busy the 
business will be profitable in proportion. He has not 
learned that there is a very wide difference between busi- 
ness and "busyness." 

The vital thing in business is profit. Sales without 
profit create waste effort and destroy opportunity. 

Profit can be increased in but two ways: reducing 
the cost, or increasing the price. The latter is hardest to 
accomplish. Study of methods and knowledge of costs 
are essential to the first. More efficient equipment and 
a loyal spirit on the part of the employees are great helps. 
A study of the findings of the Cost Engineering system 
will show where the losses occur, and consequently dis- 
close the weak places in business methods. 

The margin of profit is the important thing. The 
proportion of the order which is profit is always relatively 
small. It is to increase that margin that he should work. 

Few box manufacturers realize that if they can by 
good salesmanship increase the selling price five per cent, 



204 Manual of Cost Engineering and Estimating 

it frequently results in increasing the profits one hundred 
per cent. A reduction in the cost of five per cent on the 
order that would otherwise yield five per cent profit will 
have the same effect. 

Fear is a mental terror. It makes the box maker 
hesitate to ask a fair price for the product which is not 
yielding a fair profit. There is the fear that he will lose 
the order, the fear that the customer will think he is 
making too much. Study of the cost system will show 
exactly what the truth is in regard to the profitableness 
of the order. If the higher price is fair the customer can 
be convinced by showing him the cost sheet, and the 
method of finding the cost. 

Don't be afraid to show a businesslike cost sheet. 
It will create a confidence in the fairness of your prices 
that can be created in no other way. Buyers frequently 
tell the manufacturer who uses a Cost Engineering system 
that if that is the way he finds the cost he can have all 
of their business and make the prices when the work is 
done. 

Much depends upon the impressions created in the 
minds of your customers. An untidy office is pretty apt 
to indicate a chaotic mentality in the man behind the 
business. A man's character is bound to show in the 
things which he owns or works with. Carelessness in 
records is never permitted by the man who is careful of 
the details of his processes. A man cannot do one set of 
things thoroughly and be slovenly in another. 

The man whose office and factory have a shabby run- 
down appearance often tries to tell a traveling salesman 
how profitable his business is. The effort is wasted. The 
traveling salesman who has ability enough to travel for 
any length of time gets a training that enables him to tell 
better than the boss whether the shop is prosperous. The 
boss can fool himself but he will fool very few salesmen. 

Experience and observation are twin teachers whose 
efficiency is unquestionable. The salesman gets both of 
these in a very large measure. His deductions as to the 



For Paper Box Manufacturers 205 

financial condition of a concern are frequently more re- 
liable than the reports of a mercantile agency. 

In a choice of partners for a manufacturing business 
the author believes that as between a salesman and a 
good mechanic the advantage is all with the salesman. 
Two workmen who go into business together will fail 
within a very short time in four cases out of five. If an 
efficient workman and a good salesman go into business 
together there is a much better chance of success, for at 
least one of them knows something of the fundamental 
principles of business. Two salesmen, of wide experi- 
ence, temperamentally suited to each other, will 
usually win. 

Why does the workman fail? Because it is a com- 
monly recognized fact that the probabilities of success in 
any undertaking are in the ratio of his understanding of 
the fundamental principles which underlie the work in 
hand. Skillful workmen must give their best effort to 
their work or they would not be skillful. This precludes 
the possibility of their giving their attention to a study 
of business principles. The workman reaches a point 
where he sees no opportunity for advancement as a me- 
chanic. He becomes restless, saves a little money and 
decides that his experience fits him to go into business. 
He knows the product and how it is made from start to 
finish. 

He has seen the boss wearing good clothes and ap- 
parently taking life easy. He is a better mechanic than 
the boss and is sure that he can make boxes better and 
cheaper than the prices that are being charged for them. 

He invests his money. The shop viewpoint has al- 
ways been that material and labor were the chief ex- 
penses. The others were negligible. He makes prices 
under the old employer's, but is sure he can afford to. 
He keeps no records because he knows the business so 
well he does not need to. In a few months he fails and 
cannot understand why. Lack of capital is given as the 
reason. All failures are caused by lack of capital. 



206 Manual of Cost Engineering and Estimating 

Why did he lack capital? Because his outgo ex- 
ceeded his income. That condition will create a lack of 
capital sooner or later in any concern. How long it will 
take depends upon how much they have when they start 
and their ability to bluff the supply houses. 

The fact was, he did not understand the law of suc- 
cess. He had not made a study of the principles of busi- 
ness. He had studied the principles of production only. 

When the salesman, the business-trained man, went 
into business he did not pretend to know all about the 
production elements. He was on his own ground. He 
knew that to succeed he must sell the product at more 
than it cost. He depended for his information not upon 
a vague assumption of knowledge, but upon actual rec- 
ords of performance. He watched his income and his 
outgo. 

If he didn't have a cost system he at least knew the 
principles of business and avoided the mistakes which 
caused the workman to fail. 

The manufacturer who would succeed must first get 
the commercial viewpoint. He must realize that he is 
selling commodities just as surely as is the merchant. He 
must get more for his product than it costs him or he is 
bound to fail. 

He must keep in touch with the details of his factory 
operation, not through observation alone but by the use 
of records. He must realize the importance of the little 
things that he has been accustomed to look upon as in- 
significant. 

He must have such a grasp of the elements of cost 
and their application to his product that he can convince 
his customers of the fairness of his prices, and hold their 
confidence through continued fair dealing. 

He must study the laws of psychology that he may 
sell his goods profitably and deal fairly with his em- 
ployees. He must study the fundamentals of his business 



For Paper Box Manufacturers 207 

and its relation to other businesses, that he may become 
a worthy factor in the industrial fabric. 

He must deliver with every order the quality of serv- 
ice which will make the transaction mutually profitable 
to both himself and his customer; thereby building for 
himself and his business a balance of good will which 
will make his business not only profitable but permanent. 



Enthusiasm is the thing in a man's makeup 
which stirs him to make many good New 
Year's resolutions; determination is the 
measure of the worth of enthusiasm. 

Inspiration leads man to try new things, to 
seek new ways, to climb; understanding 
is the attribute which materializes inspir- 
ation. 

Optimism pulls a man up to a better work- 
ing plane, keeping him right with himself 
and with the world; ability crystallizes 
optimism. 

Enterprise starts a man off along new paths ; 
resourcefulness keeps him on the best of 
those paths and furnishes him with a spur 
through life. 

Initiative lifts man out of his time-worn 
ruts; fitness keeps him on the crown of 
the road. 

And, above all, responsibility together with 
an amalgam of all these attributes, brings 
success. — Brill's Magazine. 



CHAPTER SEVENTEEN 

Getting the Most Out of Your Business 

The Age of Specialization — The All-Round Workman a Poor 
Workman — Necessity for Organization — Definite Lines of Au- 
thority and Responsibility — The Chaotic Factory — The Organized 
Factory — Charts — Object of Business — Effect of the "Filler" on 
Business — Limited Range of Effort — Volume Not Vital — The Part 
of the Price that Really Counts — Armour on "Sentiment" Effect 
of Feelings — Value of Analysis — When a Transaction is Really 
Completed — The Importance of the Margin of Service. 

Failure often is the result of allowing a business to 
drift. Momentum never yet carried a craft up stream. 
Indifference and contentment expose the frail industrial 
bark to danger upon the shoals of apathy, ignorance, 
egotism, and arrogance. Constant activity at the oars of 
trade is necessary for commercial progress. 

"Eternal vigilance is the price of liberty" — from 
losses, as much as from anything else. Keep the eyes and 
the mind open for new ideas that can be utilized. No 
man knows so much that he can afford to stop learning. 
A new viewpoint, a new method, may revolutionize an 
old business. Select something that you can do well, and 
profitably, then specialize. 

This is an age of specialization. "The jack of all 
trades is master of none." That was true in the eigh- 
teenth century, which was a time of simplicity compared 
with our day. The man who is an all round workman 
in any trade today is in practically the same position as 
the jack of all trades of the olden times. 

Today, a workman is a specialist. He does one thing, 
performs one operation of a many-processed trade; but 
he does it better and faster than it could be done in the 
old days. The business executive who would succeed 
must also be a specialist. A man cannot be a good sales- 
man, a good manager, a good factory superintendent, 
and a skillful workman at the same time. 



210 Manual of Cost Engineering and Estimating 

Many box makers pride themselves on their ability 
to go into the shop and do any kind of work and do it 
well, but if they keep up the necessary dexterity of hand, 
and mental attitude, to be good workmen in the shop, 
they do it at the expense of the commercial side of the 
business. The test is given when actual records of per- 
formance are compared with those of other skilled work- 
men whose minds are concentrated on their special work. 

No man can have his mental eyes constantly search- 
ing his field for new business, and at the same time keep 
in touch with all of the details of his factory. He can- 
not study the problems of manufacture as they should 
be studied to keep down the leaks if his commercial 
duties take the attention that a good salesman must give 
to the demands of his customers. 

No work can be well done, except through concen- 
tration of effort. To be a good manager is a man-sized 
job. To be a good workman, to be a good superinten- 
dent, to be a good salesman, each is worthy of the best 
that there is in us. 

With the advent of specialization comes another new 
element — cooperation. Teamwork is a great factor in 
modern business. The manager, the salesman, the super- 
intendent, and the workmen, each specialists in their 
particular spheres, unite their effort in a single plan. 
They work to a single end — success, and they succeed. 

There must be organization or there can be no co- 
operative effort. Most paper box manufacturers have 
never learned the value of organized effort. They have 
thought of their business as a collection of men working 
under a boss. That is the old way. It will not do for 
modern business. The modern way is more definite, 
more effective. 

In a modern business there should be unity of pur- 
pose. Just as a machine is made up of many parts, so 



For Paper Box Manufacturers 211 

arranged as to operate with the least possible friction, 
but all designed to produce a certain result; so the mod- 
ern factory organization should be coordinated as a 
profit-producing machine. 

Every man should have his place, just as every part 
of the machine is designed to work in harmony with 
every other part in attaining its object. No man should 
be confused with a multiplicity of responsibilities. "No 
man can serve two masters," in modern language means 
that he cannot be responsible to two different individuals. 
Neither can he succeed if his duties conflict with each 
other. 

Definite responsibilities go hand in hand with defi- 
nite authority. Most friction in factories is due to lack 
of a plan of organization. Every man should have defi- 
nite duties, and his mind should be clear as to what those 
duties are. Every man should be responsible to some 
one higher up for the manner in which he performs those 
duties. No man should have to report to two bosses. 
Every man in authority should know definitely the limi- 
tations of his authority, as well as to whom and for what 
he is responsible. Defined duties will prevent misunder- 
standings, make it difficult for one at fault to excuse him- 
self by shifting the blame for error on to some one else, 
make each man feel the importance of keeping up his 
part, and assure each that he will get full credit for his 
effort, as well as be certain to be criticised for laxity. 

The business that depends for its success upon the 
activities of a single mind stands upon a precarious foun- 
dation. One man presumes to be capable of seeing and 
controlling all of the active factors, and when he fails 
never thinks to blame himself but makes a goat of some 
subordinate. When some big thing is to be accomplished, 
the subordinate who has presented the idea is pushed 
aside and he takes the reins and the credit, thus destroy- 
ing initiative and hearty effort on the part of the other. 



212 Manual of Cost Engineering and Estimating 



The following diagrams show the difference between 
the way the average box factory is operating and the 




plan by which friction may be avoided and cooperation 
secured : 

The first diagram represents a condition common 
where one or more executives interfere with the normal 
functions of all branches of the business. They butt into 
the duties of other officers, so that they not only cannot 
plan and execute the work, but must expect criticism and 
orders to change their plans before there is an opportunity 
to see whether the results will prove up to expectations 
or not. 




For Paper Box Manufacturers 213 

The second diagram shows a plan of organization in 
which authority and responsibility are defined. This plan 
will eliminate friction. 

Success in modern business is easiest won by select- 
ing for positions of responsibility the best men available, 
giving them definite responsibilities and the authority to 
carry their work to the finish unhampered. If they do 
not succeed there can then be no question as to whose 
is the fault. 

Keep in mind that you are not in business to make 
paper boxes. The making of boxes is simply your tool 
for the more important business of making profits. If 
more managers would get this idea indelibly fixed in 
their minds there would be little price cutting, and a 
greater effort to learn the cost and other facts of pro- 
duction. 

In making prices it is well to forget the competitor 
entirely. Learn the cost of producing boxes in your own 
factory and see that your prices cover a fair profit above 
it. Profit begins where expense ends. 

One of the most serious menaces to the industry is 
the belief on the part of many that they can afford in 
the dull season to take orders at cost or less for the sake 
of keeping down the "overhead," or to keep the plant 
busy. 

Keeping the plant uniformly busy is very desirable, 
if it can be done on profitable work. But the so called 
"filler" fills nobody's pockets except the customer's. The 
result of the filler is always to destroy good profitable 
business. 

The customer who buys the filler in the dull season 
will always demand and expect to get the same price in 
the busy season when he wants his order duplicated. 
You dare not take him into your confidence and explain 
the conditions under which the low price was given. If 
you do, he will not only fail to appreciate the saving you 
voluntarily gave him, but he will immediately start scout- 
ing for a box factory that is dull and needs a filler. Next 



214 Manual of Cost Engineering and Estimating 

season he will arrange to hold back on the business, that 
you might profitably handle, until the dull season, then 
hammer the price down still further with a threat to take 
the work elsewhere. 

If you make your prices on the basis of a known 
average cost, and stand pat, and your competitors will 
do likewise, your busy seasons will carry the dull months, 
and all will make a fair profit. There will be no demor- 
alization of the industry as there is today. 

If you cannot do that, bend your energies to the selec- 
tion of a specialty which you can make for stock in your 
dull season and sell readily at a profitable price in the 
busy season. 

Get away from the idea that because you are making 
paper boxes you must try to make every kind of box that 
is used. Specialization applies to factories as much as 
to individuals. We can do best the thing- that we do 
oftenest. If you will give your attention to the building 
up of a trade in a certain line of boxes you will find that 
you can create great economies in production, that will 
greatly increase both output and profits, at prices which, 
while legitimate, are so attractive that consumers of that 
class will soon find that you are giving them quicker and 
better service at economical rates, and your competitors 
will have an opportunity to develop as specialties some 
of the lines which you no longer find desirable. Thus 
the objectionable features of competition will be dimin- 
ished, the entire trade benefited without harmful effect 
on the consumer. 

Too much importance is given to volume of business. 
Considering the number of large and small concerns there 
are as many failures among the large concerns as among 
small. A small or medium-sized business that is profit- 
able is better than a large business that can barely break 
even or is losing money. There is no relation between 
volume of business and profits. 

The important thing to keep in mind is the profit- 



For Paper Box Manufacturers 215 

ableness of the business which you can get without hav- 
ing to sacrifice the profits in the effort. The relation 
between the turnover and the net return is worth con- 
sidering. Every loss should be specially investigated to 
find the cause and stop the drain. It is better to take a 
hundred dollar order at ten per cent profit than to take a 
two hundred dollar order at five per cent profit. While 
the net result financially is the same, the mental and 
nervous energy is less on the smaller order. 

Remember that whereas the selling price is one hun- 
dred per cent, the profit is only ten per cent, and that 
each one per cent taken off of the price reduces the profit 
ten per cent. Profit is the only part of the price that 
really counts when the transaction's closed. 

The greatest asset a concern has is the loyalty of its 
employees. Nothing should be permitted to destroy the 
good will or confidence of the workmen and other em- 
ployes. J. Ogden Armour, in a special article in the 
American Magazine, says: 

"Sentiment in business was never more alive than it 
is today. Any able employer of labor knows that kind- 
ness and fairness build the cornerstone to a man's best 
effort. From a purely commercial standpoint, discarding 
all other reasons, they are the soundest investments in 
the world. You can buy a man's work, but you cannot 
buy his loyalty. That can be gained only by treating him 
fairly. I have declared repeatedly that any success that 
has come to me has been due almost entirely to the loy- 
alty of my men and their eagerness to please me. I con- 
sider this sentiment of more value in dollars and sense 
than the entire financial investment in our business. 

"I do not want my men to work because they fear 
me, or because they are afraid of losing their jobs. I 
want them to work because they want to work, because 
they would rather work here than any other place in the 
world. A man is no good to me unless he is necessary 
to Armour & Company, and we are necessary to him. 



216 Manual of Cost Engineering and Estimating 

"As a matter of practical business common sense, I 
make it a rule that my door shall always be open to my 
men, and any employee, down to the humblest day la- 
borer, may feel free at any time to bring his troubles to 
me directly. My job would not be worth while under 
other conditions. 

"In the last analysis, a business and an individual 
have much the same characteristics; they make friends 
and enemies in exactly the same ways, and nothing pays 
either quite so well as to be fair." 

After all, men do not do as they know, they do as 
they feel. Men who drink to excess, know that it is harm- 
ful, yet feeling or desire carries them over the point of 
reason and self-contfol. Your employees know that it 
is their duty to give you a full day's work for a full day's 
pay, but whether they do it or not depends upon their 
feelings toward you, rather than on their sense of duty. 

A factor of vital importance which is not given the 
consideration it deserves is that of the health of the em- 
ployees. 

A manufacturer must not only have a Cost and Pro- 
duction Record System, but he must keep in close touch 
with showings if he will realize the tremendous drain 
that occurs from his profits by reason of the absence of 
employees. 

Absences, preventable to a large extent, are respon- 
sible for delays, disorganization of the forces of the shop 
departments, and an atmosphere of uncertainty through- 
out the entire business. 

Promises cannot be kept unless the workers are pres- 
ent regularly at their machines and benches. Even then 
the condition of health must be such as to insure their 
giving a reasonable day's work in return for the pay they 
receive. Customers become dissatisfied with the service 
of a manufacturer who cannot be relied upon to deliver 
his product at the specified time. 

Mere presence at the machine or bench is not all that 



For Paper Box Manufacturers 217 

is necessary. A healthy worker will do more work than 
one who is indisposed. The average manufacturer who 
pays his help on a piecework basis is prone to overlook 
the importance of health. He becomes accustomed to the 
thought that he pays only in proportion to the amount of 
work delivered by the employee, failing to realize that 
even in a well managed factory, the elements of operating 
expense aside from payroll are greater than the payroll. 
These expenses go on whether the production center is 
operating to its full capacity or not. Certain of the ex- 
penses are accumulating even while it is idle. 

Factory conditions have much to do with the health 
of the employees. So important is this factor that the 
Cloak, Suit and Skirt industry in the City of New York 
has appointed a Joint Board of Sanitary Control, with 
power to regulate factory conditions that relate to the 
health of employees. 

This Joint Board has developed a schedule of twenty- 
eight sanitary standards which they have expressed so 
concisely that it is worth while to incorporate them in this 
chapter for the information of paper box manufacturers : 

1. No shop to be allowed in a cellar. 

2. No shop to be allowed in rear houses or attic 
floors, without special permission of the Board. 

3. Shops located in buildings two stories or more in 
height must have one or more fire-escapes. 

4. All fire-escapes to be provided with ladders to the 
roof of same house or to an adjoining house; also with 
full length drop ladders, properly located and adjusted. 

5. In all shops which are not provided with auto- 
matic sprinklers there should be a sufficient number of 
chemical extinguishers, or a sufficient number of fire 
buckets, properly located and filled. 

6. Special caretakers to be appointed in each shop 
for the care of the fire buckets, and for their use in case 
of fire. 



218 Manual of Cost Engineering and Estimating 

7. All openings and exits to fire-escapes to be left un- 
obstructed by tables, machines, boxes, partitions, and iron 
bars. 

8. No doors to be locked during working hours. 

9. No smoking to be permitted in workshops. 

10. Conspicuous signs to be placed throughout the 
shop, marking location and direction of exits and fire- 
escapes. 

11. Fireproof receptacles, lined with tin, and having 
a tin cover, to be provided, in sufficient numbers, for 
rubbish. 

12. Halls and stairways leading from shops to be 
adequately lighted by natural or artificial light. 

13. Stairs to be provided with secure handrails and 
safe treads. 

14. Sufficient window space to be provided for each 
shop, so that all parts of the shop be well lighted during 
the hours from 9 a. m. to 4 p. m. 

15. Where gas illumination is used, arc lights or in- 
candescent mantles should be used. 

16. All light to be well shaded, to be placed above 
operatives, and not too near them. 

17. At least 400 cubic feet of space, exclusive of bulky 
furniture and materials, should be provided for every per- 
son within the shop. 

18. The shop should be thoroughly aired before and 
after work hours, and during lunch hour, by opening 
windows and doors. 

19. No coal should be used for direct heating of 
irons (adhesives) and whenever stoves are used for heat- 
ing shops, they should be surrounded by metal sheet at 
J east five feet high. 

20. Walls and ceilings of shops and water-closet 
apartments should be cleaned as often as necessary, and 
kept clean. 



For Paper Box Manufacturers 219 

21. Floors of shops, and of water-closet apartments, 
to be scrubbed weekly, swept daily, and kept free of 
refuse. 

22. A separate water-closet apartment shall be pro- 
vided for each sex, with solid partitions to extend from 
floor to ceiling, and with separate vestibules and doors. 

23. Water-closets to be adequately flushed and kept 
clean. 

24. A special caretaker to be designated by the em- 
ployer to the care of the shop and water-closet apartments. 

25. A sufficient number of water-supplied wash- 
basins to be provided, in convenient and light locations 
within the shop. 

26. Suitable hangers should be provided for the 
street clothes of the employees, and separate dressing 
rooms to be provided wherever women are working. 

27. Water-closet apartments, dressing rooms, wash- 
rooms, and lunch rooms to be properly lighted, illumi- 
nated, ventilated, cleaned, and kept clean. 

28. All seats to have backs. 

Study your business. Study its needs, its strong fea- 
tures, but above all, its weak features. Analyze every 
case of trouble. Get at the facts, and do not hesitate to 
face them squarely. If you do not face them now they 
will come back later and stare you in the face demanding 
recognition. If you slight the opportunity for analysis, 
you may develop a case for autopsy. 

Analysis means a study of all of the elements, indi- 
vidually and in relation to each other, for the purpose of 
development. Autopsy is the post-mortem examination 
made for the purpose of locating the trouble, when it is 
too late either to better the condition or save the patient. 

Provide for frequent analysis by installing the most 
practical costfinding system obtainable. Give the neces- 
sary time to learn how it is designed and how to make 



220 Manual of Cost Engineering and Estimating 

the best use of it. There is nothing mysterious about a 
cost system. What appears to be mystery is simply the 
mist of ignorance. Things seem vague and mysterious 
only as they are unknown. The known is always simple. 

Finally, in your dealings with your patrons remem- 
ber that no transaction is completed until the customer 
is satisfied. Getting the money does not close the deal. 
You must earn more than the money, if you are to suc- 
ceed in business. You must earn good will. 

Most people have an idea that good will can be cre- 
ated by spending money for publicity. This is a grave 
mistake. Every particle of good will that a concern re- 
ceives, or is entitled to, represents a margin in service 
delivered above the price asked for the service. The 
customer who feels that he paid for your service all that 
it is worth, holds himself under no obligation to you; 
but the customer who feels that your service was worth 
more than he paid, holds in reserve a margin of good 
will which he is ready to pay promptly whenever he feels 
that he can do you a good turn. 

To get the best results from your business you must 
ever keep your mind open to new ideas and methods; 
you must establish lines of authority and responsibility 
within your organization that you shall deserve the con- 
fidence and loyalty of your employees;- you must know 
your cost so that you can deal fairly with your customer, 
yet receive the fair profit that is your right; you must 
analyze your factory to know its needs in time to prevent 
waste and loss; you must deliver to your customer, in 
addition to the tangible product for which you take his 
money, a less tangible, but no less important margin of 
service which shall bind his good will to your business 
that it may continue to grow and prosper. 



CHAPTER EIGHTEEN 
Pitfalls in the Pathway to Profits 

The Causes of Failure — Effect of Conditions — Nine-Tenths of 
Failures Preventable — All Great Forces Invisible — Experience the 
Great Teacher — Ignorance a Relative Term — The Pitfalls — Apathy 
— Procrastination — Conceit — The Superficial Viewpoint — Conser- 
vation That Wastes — Aggressive Competition — Worshiping Pre- 
cedents — Responsibility Without Authority — Demanding Results 
Without Providing Equipment — Looking Through the Wrong End 
of the Telescope. 

In the mind of every man who ventures into business 
for the first time, is the positive conviction that he is 
going to succeed. No man would make the venture if 
he thought he stood an equal chance of failure. Some- 
one has said that ninety-five per cent of men who go into 
business fail. That may or may not be true, but it does 
not necessarily mean that they all prove total failures. 
Some of the most successful men in America failed in 
their first business venture. 

Failure is always the result of conditions. Nine- 
tenths of the causes of failure are avoidable. In other 
words, they were due to conditions which can be reme- 
died, and future failures from the same causes prevented. 
That is because nine-tenths of the failures have been 
due to reasons traceable to the persons engaged in the 
businesses which failed, and not to conditions over which 
there could have been no control. 

This book has been written to help paper box manu- 
facturers make larger profits; to help paper box manu- 
facturers succeed. It would not fulfill its mission if it 
did not call his attention to the unseen snares and hidden 
pitfalls of which he must beware if he will escape the 
fate of the ninety-five per cent who fail. 

Few men who fail know why they failed. Almost 
invariably they name as the cause something which had 
little or nothing to do with the misfortune. The man on 
the spot cannot see the spot. Usually the man who fails 
is so close to the cause that he needs the mirror, instead 



222 Manual of Cost Engineering and Estimating 

of the microscope, to get a view of its physical evidence. 
But the real cause he cannot see. 

The great forces of the universe are invisible to the 
physical senses. In time we learn to know the power of 
these forces through experience. Whoever saw the forces 
of gravitation and momentum? Yet these are the forces 
that move the air with the swiftness that destroys in the 
tornado. Steam and electricity under the conditions 
which make the exertion of their energy possible are in- 
visible. To the man who knows nothing of the forces 
which move through them the "dead" engine and the 
"live" wire look no different from the "live" engine and 
the "dead" wire. The evidence of the power is in its 
action. 

There are unseen economic forces working constantly 
in the business world, building or destroying, pressing 
forward or retarding, according to the conscious or un- 
conscious control of the individuals responsible for the 
business concerns in which these forces are at work. 

The great difficulty is that they are unseen and un- 
known to those whose interests they most vitally concern. 
Much that the author will write will sound like platitudes 
to the average reader's ear. It is the fear that these things 
be treated as platitudes that discourages the hope that 
they will be heeded. The tendency of the reader too 
often is to think that these things apply to the other fel- 
low and not to himself. The really ignorant man is wise 
in his own conceit. We are not conscious of the thing 
which we do not know. That is why it is so hard for us 
to learn the lessons we need until a jolt wakes us to a 
realization of some deficiency. The big force that causes 
more failures than any other is the negative force of 
ignorance. 

Ignoranee is an underlying cause. It manifests itself 
in many ways. The unsuspecting are its victims. The 
most learned in some lines are absolutely ignorant in 
others. The term "ignorant" is not necessarily a cause 
for offense. We are all ignorant of most of the things 



For Paper Box Manufacturers 223 

that we ought to know. Mankind has discovered com- 
paratively few of the mysteries of nature. Compared to 
Omniscience, what the wisest of us knows is comparable 
to a drop of water and the ocean. We must not then take 
offense if we are called ignorant by someone whose ob- 
ject is helpfulness. 

This chapter is about "pitfalls." No man would step 
into a pitfall, knowingly. If you have business troubles 
you have stepped into some of the pitfalls that lie in the 
path of the business man. If you knew they were there 
you would have avoided them. It is to tell you of some 
of them that this chapter is written. If it helps you to 
avoid even part of them the mission of the book will be 
fulfilled. But the help is intended primarily for you, 
Mr. Reader. Apply the message at home, in your own 
business first, then pass it on to your competitors. 

Apathy is the pitfall which lulls its victim into a 
dreamless sleeplike sense of security. Were dreams to 
come they might portend the disaster that is sure to fol- 
low this attitude. As long as the creditors are not too 
insistent; as long as the stream of money continues to 
flow through the business, its decreasing volume being 
unnoticed, as long as the reserve of credit holds out; all 
seems well. The hail of friends "How's business?" al- 
ways gets the same reply, "Fine." The poor deluded 
mortal tells the same story over and over without stop- 
ping to analyze his business to see whether it is true 
or not. 

When the time comes for the financial statement to 
be made up, he scans the figures, says "This has been an 
off year, we will not charge off depreciation, our plant 
is as good as it was a year ago." He hypnotizes himself 
into the belief that no blame attaches to him, that with 
a better season next year things will right themselves. 
By omitting some of the economic expenses he can make 
a showing to his stockholders. He fills his mind with 
the things he wishes the directors and stockholders to 
think and passes them on with such sincerity that he 



224 Manual of Cost Engineering and Estimating 

convinces himself that they are true. He didn't mean to 
lie about it, but sees no reason why anyone should get 
worked up over what cannot be helped. All he needs 
is a chance in a good season to show what he can do. 
The business is far from insolvent, why should he worry? 

The name of the apathetic paper box manufacturer 
is legion. He is ignorant (he doesn't know) that in the 
paper box industry he can start in business auspiciously, 
build up a good trade for the size of his plant, keep the 
business going for fifteen years, while losing ten per cent 
of his capital every year. He can do all of that and still 
double the size of his factory. 

One paper box manufacturer read a similar state- 
ment in a former book by this author, called upon him 
to explain, which he did with such satisfaction that the 
box manufacturer installed a cost system and now finds 
it profitable to be guided strictly by what it shows him. 

Procrastination is said to be "the thief of time." 
Aroused from the lethargy that has enthralled him, the 
victim hears the warning but lets it pass unheeded. The 
danger does not seem imminent. He has never felt the 
sting of failure, surely it is not meant for him. He is 
resourceful. He will find a way to hold the danger back 
when it really threatens. Next week, next month, next 
year will be time enough. Why should he pay someone 
else to tell him about his business ? He can figure the cost 
when it is necessary. If real difficulties come, his friends 
will see him through. Others may fail but he is one 
destined to success. 

Now and then there are indications that all is not 
well with the business. That financial statement worries 
him for a day or two. It was harder this time than ever 
before to make the annual clean-up that the banker in- 
sists upon. The banker is a crank anyhow. If he gets 
nasty, the new bank, which is nearer, will be glad to take 
his account. Time heals the hurt. The supply house has 
noticed that he no longer discounts his bills; they have 
reduced his line of credit. That is a matter of policy. 



For Paper Box Manufacturers 225 

They have noticed that times are harder, and must play 
safe. The supply house insists on payments being made 
on time, but the down payment on the new machine 
which he just bought took all of the available money. 
Well, suppose they are insistent, the other supply house 
has been clamoring for his trade, they can have it. But 
the glue salesman and the board salesman meet in the 
hotel. "What's the matter with old Easygo?" "Same old 
story, asleep at the switch. I've got orders not to sell him 
any more." "Guess I'd better turn in a report on that." 
Then comes the real thing. The banker says, "Your finan- 
cial statement was crooked. I lost confidence in your 
word long ago." The supply house sa3 r s, "We saw it 
coming, our salesman talked to you about a cost system 
but you thought you knew all about your business. You 
wanted to try out your own system before hiring an out- 
sider. We knew it wouldn't work, because many have 
tried it and failed. But you didn't even try, you put it 
off, and now it is too late." 

Conceit is usually not only the boon companion, but 
the offspring of ignorance. The really sagacious man 
knows that he can pick up valuable ideas from even the 
apprentices if he talks to them about the work that they 
are doing. It is only the ignorant manager who poses as 
knowing all about his business; who is unwilling to get 
another's viewpoint; who refuses to go to school again 
once in a while to the specialist in some phase of busi- 
ness economics, or who does not keep his door open to 
his employees. 

Conceit closes a man's mind to the results of other 
people's experience; closes his ears to the warnings of 
his friends; makes him exaggerate every atom of praise 
and minimize the value of criticism; makes him lie to 
his banker, to his creditors, to his directors, to himself. 

Conceit alienates a man from his associates, keeps 
him from fraternizing with his competitors, destroys the 
good will of his employees, and the confidence of his cus- 
tomers. Conceit is an indication that a man is out of 



226 Manual of Cost Engineering and Estimating 

harmony with the race; it is an indication of a small 
mentality; it is mental astigmatism; it makes a man see 
things as they are not; makes him think himself the 
superior of his fellows. 

The conceited paper box manufacturer thinks that 
he can sell boxes cheaper than any other manufacturer, 
and make a better profit on the sales; that his estimate 
of the cost is more accurate than a cost system; that his 
competitors are a lot of "dubs"; and that what he doesn't 
know about making boxes and profits isn't worth 
knowing. 

The superficial viewpoint seems to be as far as some 
men can get. The box manufacturer who suffers from 
having been caught in this pitfall cannot see the neces- 
sity for analysis. He says, "My bank account is the indi- 
cator of my prosperity. If my bank account goes down 
I know I am losing money, when it increases I know that 
I am making money." He doesn't think far enough be- 
low the surface to see that when business is booming he 
takes the money out of the bank and puts it into work 
in process and accounts receivable; that when business 
is dull he realizes on the output of the busy season and 
having less demand for the money in the business the 
bank account increases. He neither thinks deeply nor 
gives other people credit for thinking deeply. 

The manager of a box factory who is addicted to the 
superficial viewpoint sees no necessity for conforming to 
fundamental principles. He uses the rule of thumb in 
his calculations. He guesses at the cost and guesses at 
the price. He thinks a cost system is a lot of bother and 
costs too much to keep up. He figures the cost of the 
board at the invoice price. He guesses at the cost of the 
trimming materials. He adds together the piecework 
rates per thousand, multiplies the result by the number 
of thousand the customer requires, adds a percentage for 
overhead, and if he gets the order, congratulates himself 
that he beat the competitor to it. 

He keeps no factory records; has no perpetual in- 



For Paper Box Manufacturers 227 

ventories; rarely has a financial statement taken off his 
books. When he does, he declines to consider interest 
on investment as a part of the expense. Depreciation he 
considers unimportant. He thinks that all he gets over 
the cost of the board and labor is profit. Frequently he 
draws no salary but takes the money needed for personal 
expenses out of the cash drawer. He exaggerates his 
statements of profits and minimizes his losses. He keeps 
his business largely in his head. To him system is red 
tape. When the sheriff takes charge of the remains of 
his plant he blames his competitors. 

Conservation that wastes is of common occurrence. 
Doing work by hand that should be done by machinery, 
rather than make the investment, may seem like an im- 
mediate saving but will eventually prove a loss. Going 
without vital records in your business to save the clerk's 
salaries, may destroy the profits which should be made 
on the work of many employees. Using your personal 
time and energy in trying to install your own cost system 
may lead you to think that you are saving the engineer's 
fee but it is only another way of paying a high price for 
experience. You may like the looks of your creation, 
be as puffed up as the boy who has made his first kite, 
but like him you will probably find in the test that its 
"tale" is either too long or too short, and that after all 
your expenditures of time and effort it will not work. 

You have probably learned that in this day of spe- 
cialization it is better to buy your shoes than to make 
them, to employ a physician than to experiment with 
your health, that the fee of the watchmaker is cheaper 
than the result of your tinkering. You will also find, as 
many others have before you, that your effort to install 
a cost system is a form of false economy that not only 
endangers your profits but the foundation of your busi- 
ness as well. 

Aggressive Competition. Strife between competitors 
is about as foolish as a fight between two men adrift, 
over a log which would sustain them both in a state of 



228 Manual of Cost Engineering and Estimating 

peace. They consume their energy to no purpose. In 
the end both must share the means of support together. 

There is just about so much business to be shared 
between competitors. Strife certainly does not create 
more, but unquestionably diminishes the profit on that 
which does exist. 

All unfair competition is due to ignorance. The 
paper box manufacturer who cuts prices either does not 
know the cost of his product, and makes the prices too 
low for that reason, or he knowingly makes the prices 
low in the mistaken belief that he can develop permanent 
trade by bidding for new customers through the medium 
of unprofitable business. 

Product sold at cost is simply an exchange of dollars 
without profit or commission, and represents wasted op- 
portunity and wasted energy. Product sold at a loss not 
only destroys opportunity which might be developed into 
profitable business, but takes a dollar of the profit on 
the profitable work for every dollar of loss, before there 
is an even break. 

Profit is the only part of receipts which is worth 
working for. Competitors would always fare better in 
the end if they thought less about each other's apparent 
shortcomings, studied their own costs, and stood pat for 
a profit on every order, even though there were fewer 
sales. 

Worshiping precedents is a pitfall to which the older 
generation is particularly susceptible. "The way it has 
always been done" is a habit, hard to break, and seems 
the best way, because it is easiest, for them. The average 
man follows the line of least resistance. He may even 
see that a new method is superior, and more profitable 
for him; but if he must expend mental energy in learning 
it he will have none of it. If all men were of that type 
we would have no inventions; we would still be in the 
age of the tallow candle, the ox cart, and hand script. 
No one ever helped the world, or humanity, to make 
progress by worshiping the sacred cow of precedent. 



For Paper Box Manufacturers 229 

Most people think that if they read about something 
in a book, it is more authorative than if the same idea 
is advanced by an individual whom they know person- 
ally. The author of the book may have lived and writ- 
ten under the conditions of the eighteenth, or even the 
nineteenth, century. The book may have been an excel- 
lent authority at that time, and still valuable as a land- 
mark in the world's progress. But if his teaching does 
not coordinate with twentieth century methods it is out 
of date. 

The inventor, and the man who advocates a new 
idea, must expect to be assailed by the critics whose 
stock expression is "It was never done that way before," 
or "There is no authority for it in the literature of the 
subject." Who cares whether it was ever done that way 
before? The question is: Will it work? Is it better than 
the old way? If it will serve humanity better than any- 
thing previously devised for the same purpose it is 
worthy of adoption, regardless of whether there is any 
printed authority for it. 

Accountants have failed to find a practical method 
of determining the cost of making paper boxes, or other 
product which is required in great variety. They are 
form-worshippers. Don't blame your accountant for 
that. His job is one that does not permit originality. 
He must follow copy exactly or his accounts will not 
balance. He has been taught that there are certain things 
that constitute "standard accounting practice" and to let 
his own personal ideas lead him to do something not 
authorized by thee literature of the profession is heresy. 

The most dangerous phase of this precedent wor- 
shiping, however, occurs in the factory where there are 
two generations of the same family. The younger ele- 
ment, in the exuberance of youthful energy, wants the 
latest and the swiftest methods obtainable. It cannot 
tolerate the mental drudgery of the counting room, when 
it can be relieved by the calculating machine. It realizes 
that conditions are such that the best possible facilities 



230 Manual of Cost Engineering and Estimating 

must be had if they are to keep abreast of the times. But 
the older generation says "No, I didn't have all of these 
new f angled inventions when I was young, and you are 
no better than I was." But the fact is that when they 
were young, the old fellows had the same disposition to 
demand the best, and got it because there was not much 
to get, and little money had to be spent for it. If the new 
method will pay, it is false economy to do without it. 

Responsibility Without Authority. Trying to operate 
a business without a definite plan of organization is on 
a par with trying to operate a railroad without a time 
table or a train dispatcher. 

If there is only one man in the business or one train 
on the rails there would be no need of a plan of opera- 
tion. Just as soon as two independent units try to cover 
the same ground there is sure to be a collision. 

Duties must be defined. Every line of duty carries 
with it certain responsibilities. The responsibilities should 
be definitely stated. Every man has a right to know 
what is expected of him. Comparatively few men will 
shirk their responsibilities if they understand fully what 
they are. 

The trouble in this direction is that most paper box 
factories start in a small way; men are employed and 
given odd jobs which are at first more or less on the 
order of helpers, instead of definite positions. Because 
they are not fired, and do not want to be fired, they keep 
busy at anything they find to do until they gradually 
absorb a line of work. They have no definite authority. 
The management gets into the habit of depending upon 
them for certain results. Some day in a well intentioned 
effort they meet in a clash with either the boss or some 
other employee who is in a similar predicament. Having 
no definite authority, there is no basis for a settlement 
of their troubles, and although matters look smooth on 
the surface again in a day or two, there is a feeling in 
their minds that each was trying to take an unfair ad- 
vantage. 



For Paper Box Manufacturers 231 

It will pay the head of the concern to call together 
the men whom he holds responsible for the results in the 
business and factory, and together work out a plan such 
as was previously illustrated in this book, defining au- 
thority and the lines of responsibility. Let some one who 
is competent make a chart of the organization plan, 
hanging a blueprint of it in each department as well as 
the office. Accompanying the chart should be a brief 
typewritten statement of the duties and responsibilities. 

Such a plan will not only provide a basis on which 
settlement of disputes can be quickly made but will pre- 
vent most of the clashes of authority which cause internal 
friction. No man will have reason to feel that he is a 
goat or that someone else is a favorite. 

Frequent meetings will result in good for the organi- 
zation, and serve as an outlet for the ideas and feelings 
which develop from time to time in the minds of the men. 

Demanding Results Without Providing Equipment. 
No sensible manufacturer would demand that his em- 
ployees deliver product of good quality at a full normal 
rate of production without the tools necessary to do the 
work. Yet it is one of the most common conditions to 
see a board of directors employ a man to look after the 
business, and tie his hands by lack of proper authority 
and equipment. 

Old employees, relatives, pensioners, and others who 
serve no good purpose are kept in positions where they 
serve as obstructors of the policy of the new manage- 
ment. Knowing that he has no authority to discharge 
them, they simply counteract his efforts to get the con- 
cern out of the old ruts and upon what he believes to be 
the highway to success. 

He cannot buy a typewriter without the action of the 
board of directors. An adding machine which will save 
in clerk hire more than its cost in a year is looked upon 
as a piece of non-productive equipment. 

The author has seen hundreds of cases where the 
manager felt that his greatest need was for a cost sys- 



232 Manual of Cost Engineering and Estimating 

tern which would enable him to weed out the losses in 
unprofitable items of product, readjust prices so that 
more profitable business could be had, and get a thorough 
periodical analysis of the business for his information. 
But, he had no authority to sign the contract. 

He must take the matter before a board of directors, 
composed of men who look upon every innovation that 
requires either the expenditure or investment of money 
as a direct curtailment of dividends. His plea for out- 
side assistance in establishing a system is mistaken for a 
sign of inefficiency. The outsiders think that he should, 
with his multitude of other duties, work out a cost sys- 
tem to meet his needs. He works along for a while under 
the handicaps that are placed upon him, and finally re- 
signs, cursing the men who were so short-sighted that 
they could not see that he was simply asking for the 
tools which he needed in his job of increasing the profit- 
ableness of the business. 

They would not expect the men in the shop to build 
their own machines, or make their own tools, but they 
ask him to do what no good manager will do — waste his 
time in experimenting when he can get the result of the 
experiments which others have paid for on terms that 
will prove a highly profitable investment, thereby en- 
abling him to devote his full attention to the promotion 
of the business for whose success he is to be held respon- 
sible. 

No executive should undertake work that can be 
more economically done by someone else. The executive, 
like any other person from whom results are demanded, 
must be provided with practical tools. Boards of direc- 
tors frequently in their zeal to save pennies, permit the 
waste of time and productivity which would yield in 
profits many times the amount their obstructive policy 
seems to save. Unless boards of directors keep abreast 
of the needs of the business, and in touch with modern 
methods they will deserve the title of "Boards of Ob- 
structors." 



For Paper Box Manufacturers 233 

Looking Through the Wrong End of the Telescope. 
The average reader of this book will have had his com- 
petitors more in mind than himself whenever there has 
been criticism of the things that he believes the com- 
petitor guilty of. Whenever matters are mentioned which 
conform to his own practices or seem to conform to them, 
he is puffed up with the feeling that he himself is living 
up to the approved methods. 

If you ever looked into the reverse end of a tele- 
scope you found that the man you saw looked very small 
indeed. This is the view the average paper box manu- 
facturer has of his competitors. They look small to him. 
But he should remember that it is their habit to look at 
him in the same way. He looks small to them. 

Now the interests of both would be better served if 
both would turn their telescopes about. They would ap- 
pear to be of about equal size, men of about the same 
characteristics and very fit companions for each other. 
They would seem very much nearer together, and would 
be still better off if they would join hands, instead of 
facing each other, and go forward side by side. 

The reader of this book should keep in mind that it 
is intended to be helpful to him; to give him some new 
viewpoints which will increase the profitableness of his 
business. He should use it, not as a means of showing 
up the smallness and meanness of his competitors, but 
as a means of weeding out the weaknesses in his own 
business. 

If he does this he will not have so much time to look 
for flaws in the other fellow's business. They can both 
get together and exchange ideas and experiences with a 
feeling of good fellowship and mutual profit. 

"Some ships sail East, and some sail West, 

In the selfsame winds that blow; 
'Tis the set of the sails, and not the gales, 

That takes them where they go." — Selected. 



ADDENDA 



COMPILED AND ARRANGED BY 

The Joint Cost Committee 

OF THE 

National Federation 

OF 

Paper Box Manufacturers 
Associations 



Addenda 

PART I 

The Determination and Use of Composite Average Cost Rates, 
by Robert S. Denham — Specimen Estimates Illustrating the Use 
of Composite Averages, by Henry L. Stortz — Depreciation Rates 
Suggested by the Joint Cost Committee — Rules and Regulations 
of the Rox Roard Manufacturers Association — Uniform Order 
Rlank for Rox Roards, recommended by The Western Paper Rox 
Manufacturers Association — Paper Trade Customs — Uniform Or- 
der Form for Paper, Suggested by The Western Paper Rox Mfrs. 
Ass'n — "Safe Short Cuts in Estimating," by W. C. Carlson. 

The Determination and Use of Composite Average Cost Rates 

Ry Robert S. Denham 

Average Cost Rates determined through complete data com. 
piled in an individual factory unquestionably provide the sajfest 
and most practical basis for both Costfinding and Estimating. 

In the individual factory a definite amount of product is ob- 
tained in a given period and a definite amount of money ex- 
pended. While some months may be dull and others active the 
average cost per unit during consecutive twelve-months periods 
will vary but little. The money, being handled through the same 
channels and accounts, liquidates the shortages of the dull sea- 
sons with the surplus of the busy seasons. 

Owing to the fact that certain expenses are constant, while 
the number of production units varies with the activity of the 
seasons, creates a relatively high unit cost in the dull season, and 
a correspondingly low unit cost in the busy seasons. This makes 
it impracticable to use the average of the monthly averages. 

The true average is obtained only by combining the total 
expenses of the long period and dividing the result by the total 
of the production units of the process under consideration. 

As an illustration we will use the following data : 

Hour 
Month Expenses Hours Cost 

January . $1,628.18 1966 $ .82 

February 1,636.28 2153 .76 

March 1,683.50 2275 .74 

April 1,460.64 1432 1.02 

Totals $6,408.60 7826 $3.34 

Now if we divide the total expenses by the total hours of 
the period we find that the average cost per hour is $.819 



238 Manual of Cost Engineering and Estimating 

and adopt the rate of $.82. Multiplying the total hours by $.82 
we get the result $6,417.32, which is the amount we would 
charge for the hours at that rate, a gain of $8.72 because of the 
use of the full cent instead of the fraction. This is what we call 
the "true cost," because it is practically accurate. 

Now if we add together the monthly rates, or hour costs, we 
find that they total $3.34 and average $.84. Using this as the 
charging rate we find that we would charge as the cost of the 
product of these four months a total of $6,573.84 or $165.23 in 
excess of the actual cost. This is the average of averages. 

Some may think that a discrepancy of two cents in a rate is 
of little importance, but it is large enough to cause the loss of 
orders in which hundreds of hours are involved. 

In the absence of accurate data in his own factory the best 
form of substitute is a schedule of composite rates made up from 
the experiences recorded in other factories producing similar 
product under similar conditions. 

These rates if carefully compiled will be found not only 
much more accurate than the results of percentage calculations, 
but their general use will have a tendency to make prices more 
uniform between competitors, especially if they are used in con- 
nection with the average output rates for the same periods. 

In compiling the data for the determination of the average 
hourly rates shown on the table included in this article, the writer 
has endeavored as far as possible to exclude the extreme items, 
which because of abnormal conditions would destroy the prac- 
ticability of the rates presented. 

It will be seen by the table on the opposite page that the 
average costs per hour, for the operations of paper box manu- 
facturing, range from $0.34 cents in the case of finger-hole cutting 
and closing to $1.44 for lining machines. 

In the columns showing the highest and lowest rates reported 
for each operation, the reader will observe that the rates on many 
of the operations differ greatly as between different factories. 

These great variations require some explanation, for they 
not only puzzle the inexperienced, but are the cause of misunder- 
standing between competitors, frequently leading to price cutting 
and unjust criticism. 

Every factory, whether intentionally or not, develops certain 
lines of trade in larger volume than other lines. At the same 
time most stiff box factories will attempt to handle every class of 
work that is offered. 



Addenda 



239 



Table Showing Composite Average Hour-cost of Processes in 

Paper Box Making, the Average Hourly Output, 

and the Range of Hourly Rates in Factories 

Making Reports for 1916 

Average Average Highest Lowest 

Hour Hourly Hourly Hourly 

Operation or Process Cost Output Cost Cost Re- 

1916 1916 Reported ported 

Lining Machines $1.44 710 shts. $2.40 $.67 

Single Scoring Machines .61 88 shts. .99 .51 

Double Scoring Machines .67 508 shts. 1.09 .54 

Single Corner Cutters .44 2160 pes. .87 .33 

Double Corner Cutters .50 no record .61 .44 

Quadruple Corner Cutters .57 2720 pes. .65 .52 

S. & S. Corner Cutters .90 1 0459 pes. .94 .85 

Bending .46 no record .49 .41 

Single Staying Machines .49 472 pes. .80 .32 

Quadruple Staying Machines .72 1544 pes. 1.42 .50 

Single Ending Machines .60 242 pes. 1.24 .42 

Double Ending Machines .83 no record 1.21 .66 

Strip Covering Machines .49 243 pes. 1.11 .33 

Pony Covering Machines .43 no record 1.03 .40 

S. & S. Wrapping Machines .99 606 pes. 1.42 .63 

Top and Bottom Machines .44 367 pes. .73 .27 

Extension Edge Machines .46 533 pes. 1.09 .39 

Lacing Machines .59 483 bxs. 1.07 .36 

Finger-Hole Machines .34 no record .36 .33 

Doming Machines .71 757 pes. 1.01 .54 

Metal Edge Staying Machines .60 330 pes. 1.54 .41 

Shears 65 no record 1.16 .48 

Board Slitters .74 no record 1.62 .44 

Paper Slitters .68 813 shts. 1.74 .51 

Sheet Cutters .48 546 shts. .80 .39 

Paper Cutters .80 no record 1.35 .60 

Chopper-Saws .53 no record .85 .46 

Slotters-Lock Cutters .60 no record 1.36 .52 

Gummer-Glue Machines .52 no record 1.54 .44 

Flange Stitchers .46 202 pes. .81 .32 

Flying .48 no record .58 .44 

Necking .57 720 bxs. .64 .48 

Tube Machines .91 1550 feet 1.16 .58 

Closing .34 no record .90 .27 

Men's Hand Work .48 no record 1.22 .42 

Girls' Hand or Table Work .35 no record .69 .27 

Machine Shop .62 no record .84 .51 



240 Manual of Cost Engineering and Estimating 

The result of this condition is that certain types of equip- 
ment or processes are kept very busy and develop a low cost 
rate. Others have much idle time and have in consequence a 
high hourly cost. The limited number of chargeable hours must 
carry the total process expense for the full time whether busy or 
idle. 

Every variation in the conditions of different factories is 
reflected in the cost of their product. A type of equipment 
operated constantly to full capacity in one factory may be 
operated but twenty per cent of capacity in another. There 
must then be a variation between factories. 

Some factories are over-equipped and consequently cannot 
get the cost rates down to normal. Others are under-equipped 
and are compelled to use makeshift methods which are expen- 
sive, thereby destroying the profit which could be made under 
more favorable conditions. 

Inefficiencies are of many kinds, and degrees of effectiveness. 
They always increase and never decrease the cost of production. 
This accounts for the fact that the variations from the average 
costs shown in the table are usually much greater in the upward 
direction than downward. 

Idleness is the greatest factor in creating high costs. Con- 
tinuous production is the greatest for the reduction of costs. 
"Whenever a manufacturer finds that his cost per hour of a given 
operation or process is higher than normal he should investi- 
gate the cause. When he finds his cost below the normal he 
should study the method that he may develop it. 

The Cost Engineering system affords the best possible index 
of conditions by which the manufacturer may not only readjust 
his prices to make sure that a profit is earned on each order, but 
also increase the efficiency of his factory and organization. 

The manufacturer who relies upon the amount of wages to 
indicate the cost is frequently misled. Every increase in wage 
payment for the purpose of getting greater efficiency makes it 
appear that the cost is increased, while as a matter of fact the 
reverse may be true, , Such methods should be tabooed.. 

USING THE TABLE FOR ESTIMATING 

The Paper Box Manufacturer who has no Cost Engineering 
System covering the data in his own factory can make very safe 
estimates by the use of this table, as follows : 

After making the calculations for the cost of materials re- 
quired, he should make a list of the operations or processes 



Addenda 241 

which the materials must pass through in making the box under 
consideration. (A printed form covering all of the processes for 
which his factory is equipped will prove valuable in preventing 
omissions.) 

He should then either estimate the number of pieces that 
^an be handled per hour by a worker of average efficiency, or 
use the number shown in the second column of the table. The 
total pieces divided by the number which can be handled per 
hour will give the number of hours required to complete the 
process on the lot. This time should then be multiplied by the 
rate per hour to determine the cost for the number of hours re- 
quired. 

In some processes it is impossible to set production rates 
because of the great variation in work. In these cases no out- 
put rates are given, and an estimate must be made according to 
the best information obtainable. 

The total Estimated Cost of the prospective order will then 
consist of: 

(a) The Cost of the materials, including expenses in con- 
nection therewith. 

(b) The Total of the Process Costs figured at the hourly 
cost and output rates found by experience, or shown on the table 
presented herewith. 

The amount paid in wages must under no conditions be con- 
fused with the hourly process cost rates. Wages is but one of 
many elements. The correct cost rates include all elements. 

When cost is estimated correctly, nothing except the profit 
is to be added in determining the price to be asked for the order. 

Note — It is the intention of the Joint Cost Committee, if the 
industry encourages such action, to compile and publish new 
Tables of Composite Rates semi-annually. In that case each suc- 
ceeding table should be more complete and accurate than the 
last, as the number of users will continually increase, and a bet- 
ter understanding of the Committees' requirements will have, a 
tendency to develop more complete reports than were available 
in this instance, where advance notice of the data required had 
not been given. 



242 Manual of Cost Engineering and Estimating 

Specimen Estimates Illustrating the Use of 
Composite Averages 

By Henry L. Stortz 

The Examples of Estimates presented herewith illustrate the 
plan of estimating and calculating Cost, using the Cost Engineer- 
ing Methods as covered in the Manual, and the composite rates 
of cost and output shown in the preceding article, as compiled 
from the reports of Paper Box Factories using Denham Cost En- 
gineering Systems throughout the United States. 

It is the intention of the Joint Cost Committee in showing 
these estimates to encourage the adoption of the methods and 
principles illustrated as a basis for uniformity throughout the 
industry. 

Material. No effort has been made to reconcile the prices 
of materials specified with the actual market. In the main the 
prices are approximately in accord with the present market, but 
a part of them may be arbitrary. The reader should endeavor 
to grasp the idea rather than the actual figures presented. 

The specifications are normal. It must be understood that 
changes in specifications may materially change the cost. The 
cost of any item of material is necessarily governed by the price 
prevailing at the time the estimate is made, or upon the price 
paid for the material. As the manufacturer expects or hopes to 
stay in business and will have to replace his stock, the material 
should never be figured at less than replacement value. 

Cost of Making. In calculating the cost of making in these 
estimates the average hourly costs and average hourly output 
rates shown in the Table of Composite Averages have been used 
as far as possible. However, where no output records have been 
reported or where such averages are impractical or inconsistent 
because either too high or too low for the type of box under con- 
sideration, the method of determining the time required to do 
the work or the output per hour, would be (if labor is paid by 
piecework) to ascertain the amount paid and divide by the aver- 
age wage earned by the class of employees doing this work. This 
would show the number of hours or time the work may be esti- 
mated to require. If there are no output records, or no piece- 
work prices available, on which to determine the approximate 
time, the estimator must be governed by his experience or judg- 
ment. If the estimator is not thoroughly familiar with the work, 
or is skeptical of his ability to accurately estimate the time re- 
quired, consultation with the foreperson having supervision of 
the work in question is advised. 



Addenda 243 

Quantities. It must be evident to the reader that the quan- 
tity to be produced will affect the cost of production. Small quan- 
tities will take relatively more time than large. The setting up 
and making ready for runs on machines will take the same time 
whether the lot to be run is one hundred, one thousand or ten 
thousand. The efficiency of the operator will be greater on the 
large runs. The difference in time of running will be much 
more apparent between the hundred and thousand lots than be- 
tween the thousand and ten thousand lots. On quantities over 
ten thousand the difference will be less noticeable. 

The estimates presented are for normal quantities of the style 
or size given. For example, the estimate on the One-pound Candy 
Box is figured on a ten thousand lot. If this box was figured on a 
one thousand lot the cost would be materially higher, because 
relatively more time would be required for setting up machines 
and running the smaller quantity. 

Stock and Delivery Expenses. It is the opinion of the writer 
that the most practicable method of handling Stock and Delivery 
Expenses is to allocate them in two groups under the respective 
headings "Stock" and "Delivery". 

All expense items connected with materials (not including 
board) such as interest on investment, insurance, storage ex- 
penses, etc., should be accumulated under the first heading, and 
at certain periods, quarterly, semi-annually, or annually, the 
total should be compared with the total cost of materials, and a 
percentage determined which should be included in the cost of 
materials applied in the estimates. 

Under the heading "Delivery" should be allocated all of the 
expenses of delivery and the expenses in connection with the 
handling of board. These should be periodically prorated by 
percentage against the cost of board. 

There will be instances where conditions will not permit 
these simple methods to be used. In such cases a careful study 
should be made to determine the best method. However, since 
there is no relation between the time or cost of the productive 
operations and the expenses of delivery and stock-handling, these 
expenses should never be included in the hourly operation costs. 



244 Manual of Cost Engineering and Estimating 



Specimen Estimate on 100 Millinery Boxes 

Specification : Size, 17x17x7. 1%" lid. Board equal to No. 45 chip 26x38. Flanges on box. Ends glued on 
and reinforced or corner pieced with 1 14" kraft. by hand turned in. Lids stayed %" kraft. Box and lid covered 
grey cheviot. Lid trimmed with two strips, one 1}4" kraft turned in and one \\4" kraft showing edge on lid. 
Two No. 17 white tapes pierced through sides and glued with paper tab. News bottoms. Label on lids, 3x6. 
Printed black. 







HOW CUT 




Boxes 




Lids 


Ends . 


17x17x7 
IK 14 




17x17x1^ 
3K 3H 


17x7 


18J4x31 
2 1 
2 out 
Board No. 35 1 /s 


32x42 


.1 2 
2 lids and 2 box ends 
Board No. 35 1/s 32x42 


2 4 

8 out 
Board No. 35 1/s 32x42 



Board in 100 Boxes 

Board in 100 Lids and Ends 

Board in 100 Ends 



Lining in 

Lining cost . . 
Stay Paper for 100 
Stay Paper for 100 
Trim Paper for 100 
Trim Paper for 100 
Paper for 100 

Paper for 100 

Paper for 100 

Paper for 100 



MATERIALS 

50 sheets No. 35 chip @ $60.00 ton, $4.29 per 100 sheets. . 
50 sheets No. 35 chip @ 60.00 ton, 4.29 per 100 sheets. . 
13 sheets No. 35 chip @ 60.00 ton, 4.29 per 100 sheets. . 

113 sheets board cost 

113 sheets 32 x42 1/s news, $1.00 per 100 sheets .......... 



Lids, 600 
Boxes 3600 
Boxes, 7600 
Lids, 15200 
Boxes, 128 
Lids, 32 

Tops, 70 
Bottoms, 70 



inches %" kraft $0.03 J4 per 1000 inches 

inches 1%" kraft, 35 lb. .01 per 1000 inches 
inches 1M" kraft .01 per 1000 inches . . 

inches 114" kraft .01 per 1000 inches . . 

sheets Grey Cheviot 20x24 .50 per 100 sheets 

sheets Grey Cheviot 20x24 .50 per 100 sheets 

sheets Grey Cheviot 20x24 .50 per 100 sheets 

sheets News .20 per 100 sheets 



.15 per 100 sheets 



Adhesive Gum and Paste on 300 sheets 

Adhesive Glue, for Ends 

Tapes, No. 17 white, 100 yards 10 per 100 yards 

Labels, printed black, 1000 at a time 1.50 per 1000 



Paper and Sundry Material Cost. 



Waste and Spoilage 5% . 
Total Material Cost . . . 



MAKING 



Single Scorer, Setting up 
Single Scorer, 113 sheets . 
Single Corner Cutter 

Paper Cutter 

Paper Slitter, 300 sheets . 



Total Cutting Cost. 



Boxes Lids 



Binding up 100 

Gluing On Ends (Girl's Hand Work) 100 

Corner Piecing (Girl's Hand Work) 100 

Single Stayer 

Strip Covering (2 strips) 100 

Strip Covering (3 strips) 

Top and Bottom Papering 100 

Taping (Girl's Hand Work) 100 

Labeling (Girl's Hand Work) 

Closing or Lidding Up 



100 



100 



100 
100 



100 



Making Cost 

Total Cost of Cutting and Making 
Total Cost per 100 Boxes 



nour 
Out- 
put 



813 



472 
80 

100 

200 
40 

500 



Time 



Hour Min 



Hour 
Rate 



$0.61 
61 



68 



.46 
.35 
.35 
.49 
.49 
.49 
.44 
.35 
.35 
.34 



$4.85 



$1.13 



$0.02 
.04 
.08 
.16 
.64 
.16 
.35 
.14 

.45 
.20 
.10 
.15 



.06 



$4.85 
1.13 



2.49 



$8.47 
.42 



$1.35 



$8.89 



4.02 



5.37 

$14.26 



Addenda 



245 



Specimen Estimate on 1000 1-Pr. Ladies' Shoe Boxes 

Specification: Size, 12x5x3M- J6" Lid. Board approximately equal to No. 53, 26x38 chip lined 1/s news 
Covered friction white glaze, no edge. Lids stayed. Ends put on Single Ender. One end label printed one color 
(Black.) Bottom papered news. Tied in bundles of 25. 



Boxes 

12 x5x3}i 

1M6H 

13^x11 Vt 
3 2 
6 out 
Board, No. 50 1/s 26x40 



HOW GUT 

Lids 
12 x5x% 
2K 2X 

3 4 
12 out and 8 ends 
Board, No. 40 1/s 32 2 x44 2 



Ends 
5x3M 



64 out 
Board, No. 50 1/s 26x40 



MATERIALS 
Board in 1000 Boxes, 167 sheets No. 50 chip @ $60.00 per ton— $3.00 per 100 sheets 
Board in Ends 21 sheets No. 50 chip @ 60.00 per ton— 3.00 per 100 sheets 

Board in 1000 Lids, 84 sheets No. 40 chip @ 60.00 per ton— 3.75 per 100 sheets 

272 sheets Board cost 

Lining 172 sheets 1/s news 26x40 $0.80 per 100 sheets 

Lining 100 sheeU 1/s news 32 2 x44 J 1.10 per 100 sheets 

Lining Cost 

Stay Paper, %" kraft, 4000 inches, 12 He lb., 3.5 per 1000 inches 

Trim No. 

Edge No. 

Paper for Box, white glazed, 284 sheets 20x24 @ $2.00 per ream. $0.40 per 100 sheets 

Paper for Lid, white glazed, 120 sheets 20x24 @ 2.00 per ream .40 per 100 sheets 

Paper for Tops, white glazed, 125 sheets 20x24 @ 2.00 per ream, .40 per 100 sheets 

529 sheets 20x24 @ 2.00 per ream, .40 per 100 sheets 
Paper for Bottoms, News, 125 sheets 20x24 .20 per 100 sheets 

Paper for Labels, Book, wht 25 sheets 20x24 @ 2.00 per ream, .40 per 100 sheets 

Adhesive Gum and Paste on 679 sheets 20x24 .15 per 100 sheets 

Printing, one color 

Tie Up Twine, for 40 bundles 

Paper and Sundry Material Cost 

Waste and Spoilage, 5% 

Total Material Cost 



MAKING 



Single Scorer, Setting Up 

Single Scorer, 256 sheets 

Double Corner Cutter, 1000 Pieces, Boxes 
Single Corner Cutter, 1000 Pieces, Lids . . . 
Slitting Paper. 679 sheets 



Total Cutting Cost. 



Boxes Lids 



Hour 
Out- 
put 



2000 

2169 

813 



Bending Up 1000 

Single Ender 1000 

Single Stayer 

Covering and Turning In 1000 

Covering and Turning In 

Topping 

Bottom Papering 1000 

Finishing (Girl's Hand or Table Work) Label. . . . 1000 

Closing or Lidding Up 1000 



1000 1000 
242 



1000 



1000 
1000 



Making Cost 

Total Cost Cutting and Making 
Total Cost per 1000 Boxes 



472 
243 
243 
367 
367 
400 
500 



Time 



Hour 



Min 
~30~ 



.'iU 



Hour 
Rate 



$0.61 
.61 
.SO 

.44 



.46 
.60 
.49 
.49 
.49 

.44 

.35 
.34 



$5.01 

.63 

3.15 



1.38 
1.10 



$0.14 



2.11 
.25 
.10 

1.01 

1.00 

.25 



$0.31 

1.83 

.25 

.22 

.55 



.92 
2.40 

.98 
1.72 
1.72 

2.20 



$8.79 



2.48 



4.86 



$16.13 

.77 



$3.16 



$16.90 



14.66 



$31.56 



246 Manual of Cost Engineering and Estimating 



Specimen Estimate on 1000 12-Pr. Ladies' Hosiery Boxes 

Specification: Size, 12x6x3. Ij4" Lid. Board approximately equal to No. 60 26x38 chip lined 1/s News. 
Box and Lid stayed %" Kraft. Box and Lid covered friction white glaze, colored glaze edge on lid. Two book white 
flies. One No. 17 White Tapes. Plain Tops. News Bottoms. One end label printed one color. Tied in 
bundles of 25. 

HOW CUT 
Boxes Lids 

12x6x3 12 x6xlJi 

6 6 2H 2}4- 



18x12 

2 2 

4 out 

Board, No. 60 1/s 26x38 



14J^x8J4 
3 3 
9 out 
Board, No. 40 1/s 31 2 x44 2 



MATERIALS 
Board in 1000 Boxes 250 sheets No. 60 chip @ $60.00 per ton =$2.50 per 100 sheets 
Board in 1000 Lids 112 sheets No. 40 chip @ 60.00 per ton = 3.75 per 100 sheets. 

362 sheets Board Costs , 

Lining in 250 sheets, 26x38 1/s News 
Lining in 112 sheets 31 2 x44 2 1/s News 



50.75 per 100 sheets 
1.05 per 100 sheets . 



Lining Costs 

Stay Paper, 1000 Boxes j 18(X)0 inches y& „ Kraft _ ^ l b ., 

Trim No. 

Edge, Colored Glaze. 63 sheets 20x24 @ 

Paper for Box, white glaze, 334 sheets. 
Paper for Lids, white glaze, 125 sheets. 
Paper for Tops, white glaze, 167 sheets. 

626 sheets 20x24 @ 
Paper for Bottoms— News 167 sheets 20x24 @ 

Paper for Flies— Book White 200 sheets 20x24 @ 
Paper for Labels— Book White 25 sheets 20x24 @ 

Adhesive, Gum and Paste On 1081 sheets 20x24 @ 
Tapes, No. 17 White 900 yards 

Printing Labels, 1 color . 

Twine for 40 Bundles 



$0.03.5 per 1000 inches 
.50 per 100 sheets . . . 



.40 per 100 sheets . 
.20 per 100 sheets . 
.40 per 100 sheets . 
.40 per 100 sheets . 

.15 per 100 sheets . 
1.10 per 1000 yards 



Paper and Sundry Material Cost 



Waste and Spoilage, 5% 
Total Material Cost 



MAKING 



Single Scorer, Setting Up 

Single Scorer, 362 Sheets , 

Single Corner Cutter, 1000 Boxes and 1000 Lids 

Paper Slitter, 1056 Sheets 

Paper Cutter, 1000 Labels 



Total Cutting Cost 



Boxes Lids 

Bending 1000 1000 

Single Stayer 1000 1000 

Strip Covering and Turning In 1000 1000 

Top and Bottom Papering 1000 1000 

Taping (Girl's Hand Work) 2 tapes 1000 

Flying (Girl's Hand Work) 2 flies 1000 

Labeling (Girl's Hand Work) 1000 

Closing or Lidding Up 1000 



Making Cost 

Total Cost of Cutting and Making 
Total Cost per 1000 Boxes 



Hour 
Out- 
put 



2169 
813 



472 
243 
367 
200 
200 
335 
500 



Time 



Hour Min. 



20 



Hour 
Rate 



$0.61 
.61 



.68 



.46 
.49 
.49 
.44 
.35 
.48 
.35 
.34 



$6.25 
4.20 



$1.88 
1.18 



$0.63 
.32 



2.50 
.33 
.80 
.10 

1.62 
.99 

1.00 
.25 



$10.45 



3.06 



$0.20 
2.44 



1.02 
.08 



1.38 
2.08 
3.92 
2.42 
1.75 
2.40 
1.05 
.68 



8.54 



$22.05 
1.10 



$4.18 



15.68 



$23.15 



Addenda 



247 



Specimen Estimate on 1000 72-Doz. Shirt Boxes 

Specification: Size, 18x11x3^. 1M" Lids. From Board equal to No. 40, 31 2 x41* Plain News. Stayed Box 
and Lid %" Kraft, no trim, covered Grey Cheviot, White Glaze edge on lid, one Lid Label printed one color. 
Plain Tops. No Bottoms. One tape laced through box to tie inside, not tied. Delivered loose by wagon. 



HOW CUT 



Boxes 



18x1 1x3 H 

7 7 



25x18 
1 2 
2 out 
Board, No. 50 PI. News 26x38 



Lids 

18x11=1 \i 

2% 2% 

20Jixl3Ji 
2 2 
4 out 
Board, No. 45 PI. News 31 s x42* 



MATERIALS 



Board in 1000 Boxes 500 sheets, No. 50 PI. News I 
Board in 1000 Lids, 250 sheets, No. 45 PI. News 

750 sheets Board Cost . . . 



$65.00 per ton, $3.25 per 100 sheets 
65.00 per ton, 3.61 per 100 sheets 



Stay Paper, 19,000 inches %" Kraft — \2*A c lb., 



3.5 per 1000 in. 



Trim No. 

Edge White Glaze, 100 sheets 20x26 @ $2.00 per ream, .40 per 100 sheets 

Paper for Box— Cheviot 517 sheets 20x26 @ 2.00 per ream, .40 per 100 sheets 

Paper for Lids— Cheviot 222 sheets 20x26 @ 2.00 per ream, .40 per 100 sheets 

Paper for Tops— Cheviot 350 sheets 20x26 @ 2.00 per ream, .40 per 100 sheets 

Paper for Labels— Book White 25 sheets 20x26 @ 2.00 per ream, .40 per 100 sheets 

1214 sheets 20x26 @ 2.00 per ream, .40 per 100 sheets 

Adhesive Gum and Paste on 1214 sheets 20x26 15 per 100 sheets 

Printing, 1000 Labels, one color , 

Tapes, one 40"— 1100 yards 10 per 100 yards 

Waste and Spoilage, 5% 

Total Material Cost 



MAKING 



Double Scorer, Setting Up 

Double Scorer, 760 Sheets 

Single Corner Cutter, 2000 Pieces 
Slitting Paper, 1214 Sheets 



Total Cutting Cost . 



Boxes Lids 

BendingUp 1000 1000 

Single Stayer 1000 1000 

Covering Box and Turning In 1000 

Covering Lid and Turning In 1000 

Topping 1000 

Taping (Girl's Hand Work) 1000 

Labeling (Girl's Hand Work) 1000 

Lidding Up or Closing , 1000 



Making Cost 

Total Cost of Cutting and Making 
Total Cost per 1000 Boxes 



Hour 
Out- 
put 



508 

2169 

813 



472 
150 
125 
200 
200 
334 



Time 



Hour Min. 



Hour 
Rate 



$0.67 
.67 

.44 

.68 



.46 
.49 
.49 
.49 
.44 
.34 
.34 
.35 



$16.25 
9.02 


S25.27 
9.45 


$0.67 

4.86 

1.82 
1.00 
1.10 


$0.34 

1.01 

.52 

1.02 


$34.72 
1.74 


$2.89 
17.02 


1.84 
2.10 
3.43 
3.68 
2.20 
1.70 
1.02 
1.05 







$36.46 



248 Manual of Cost Engineering and Estimating 



Specimen Estimate on 10,000 1-lb. Candy Boxes 

Specification: Size, 7%tl% 1 Ax.I %• Telsc. Lid. Board equal to No. 80, 26x38 lined 1/s Book. Box and Lid 
stayed J4" Kraft. Box covered 1 /s Litho. One piece S. & S. Lids loose wrapped. Litho printed tops. Two Laces 
in box. Packed in bundles of 50. 



Boxes 

7^x3 Hxl X 

3V 2 3V 2 . 

10%x7 
4 4 
16 out . 
Board, No. 55 1/s Book 31 2 x44 2 



HOW CUT 



Lids 

7%x3^xlM 
&A 3Vs 

11 x7^ 
4 4 
16 out 
Board, No. 55 1/s Book 31 2 x44 2 



MATEKIALS 

Board in Boxes 625 sheets No. 55 Chip @ $60.00 per ton, $2.73 per 100 sheets \ ~ 

Board in Lids, 625 sheets No. 55 Chip @ 60.00 per ton, 2.73 per 100 sheets ...... J ***•" 



Lining in 



1250 sheets Board Cost 

1250 sheets 31 2 x44 2 1/s Book @ $1.50 



2.10 per 100 sheets , 



Lining Cost . 



Stay Paper, 140,000 inches %" Kraft .03.5 per 1000 inches 

Paper for Box, Litho 1/s 24x36, 1120 Sheets 1.00 for 100 sheets . . . 

Paper for Lids, Litho and Printed Tops 10.00 per 1000 

Flies, 2 Laces, 6667 Laces, 24" 1.20 per 1000 

Packing Paper, 200 Sheets Kraft 24x36 1.75 per 100 sheets . . . 

Adhesive Glue for Boxes, 1120 Sheets 24x36, .60 per 100 sheets . . . 

Gum for Lids, .40 per 1000 - 

Gumfor Laces .20 per 1000 



Paper and Sundry Material Cost 



Waste and Spoilage, 5% 
Total Material Cost 



MAKING 



Double Scorer, Setting Up 

Double Scorer, 1250 Sheets 

Single Corner Cutter, 20,000 Pieces 

Paper Cutter, 20,000 Laces ! 

Paper Cutter, Paper for 10,000 Boxes 

Stokes & Smith Corner Cutter Paper for 10,000 Boxes and Lids 



Total Cutting Cost 



Boxes Lids 

Bending 10000 10000 

Single Stayer 10000 10000 

Stokes & Smith Machine, Setting Up 

Stokes & Smith Machine 10000 

Stokes St Smith Machine, Loose Wrapp 10000 

Lacing 10000 

Closing 10000 

Packing 200 Bundles (Girl's Hand Work) . . . 10000 



Making Cost 

Total Cost of Cutting and Making 



Total Cost of 10,000 Boxes 
Total Cost of 1,000 Boxes 



Hour 

Out- 
put 



508 
2169 



10459 



1000 
■470 

600 

• 500 

483 



Time 



Hour Min 



30 



Hour 
Rate 



$0.67 
.67 
.44 
.80 
.80 
.90 



$26.25 



$4.90 
11.20 
100.00 
8.00 
3.50 
6.72 
4.00 
2.00 



$0.67 

1.68 

3.96 

.40 

.40 

1.80 



$9.20 

20.58 

.99 

16.83 

19.80 

11.80 

5.10 

3.50 



$34.13 



26.25 



140.32 



200.70 
10.04 



$8.91 



87.50 



$210.74 



96.71 



Add for Cases and Crates as shipped. 



Addenda 



249 



Depreciation 

The subject of depreciation is admitted to be one in which 
there is considerable difference in the practice followed by the 
industry. The committee therefore considered it advisable to 
establish Uniform Rates of depreciation and for this reason a 
"Questionnaire" was sent out to the subscribers to collect data 
showing the rates of depreciation that were being used, and from 
the data collected, after careful consideration of the subject, the 
committee makes the following recommendations: 

That for the purpose of furthering the movement for uniform- 
ity the following rates be adopted. The depreciation to be made 
from the original cost of the item — at a yearly percentage: 

Per Cent 

Buildings, brick 2 

Buildings, frame 3 



Boilers 8 

Engines 8 

Motors 8 

Elevators .___ 8 

Power transmission 10 

Cutting machinery 10 

Scorers 10 

Slitters 10 

Corner cutters 10 

Paper cutters 10 

Sheet cutters 10 

Slotters 10 

S. & S. Corner cutters 10 

Balers 10 

Liners 10 

Stayers 10 

Wire stitchers __10 

Metal edge stayers 10 

Flange benders 10 

Covering machines 7 

Topping machines 7 

Thumb holding machines. _ 7 

Gumming machine 7 

S. & S. wrapping machine. _12 

S. & S. stencil machine 12 

S. & S. gluing machine 12 

S. & S. lacing machine 12 

Flying machine 12 

Necking machine 12 



Per Cent 

Quadruple stayer 12 

Enders 12 

Hand work equipment 6 

Tables 6 

Glue pots, brushes 6 

Pony covering machine 6 

Shears 6 

Round and oval cutters 6 

Glue mixers • 6 

Trays 6 

Fixtures and utensils 6 

Hand trucks 6 

Tape winders 6 

Machine shop equipment. _10 

Saws 10 

Shelving 25 

Printing Dept. 

Platen presses _ 15 

Cylinder presses 10 

Bronzing machines 10 

Cutting and creasing press. 8 

Embossing presses 8 

Punching presses 8 

Type equipment 33^5 

Electros 33^ 

Cuts 33^ 

Delivery Dept. 

Wagons 20 

Horses 20 

Motor trucks 33^ 



JOINT COST COMMITTEE, 
National Federation Paper Box Manufacturers Association, 

Henry L. Stortz, Secretary. 



250 Manual of Cost Engineering and Estimating 

Rules and Regulations of Box Board Manufacturers 
Association 

Effective June 1, 1916 

The following Rules and Regulations were adopted by the 
Box Board Manufacturers Association and comprise all the neces- 
sary information for ordering various grades of board, the ob- 
ject being to eliminate and correct mistakes of custom and prac- 
tice and as far as possible to standardize the grades manufactured. 

DEFINITIONS AND RULES 

For Figuring Box Board 

Bundle— A Bundle of box board is a standard package of 
same weighing 50 lbs. The weight of a bundle does not vary. 

Number — The "Number" of board indicates the number of 
sheets, size 26 x 38, in a bundle weighing 50 lbs. 

Count — By "Count" is meant the number of sheets of any 
size in a bundle of 50 lbs. 

Regular Size — The Regular or Standard Size of all grades of 
board, except Patent Coated and Solid Manila, adopted for the 
United States is 26 x 38, containing 988 square inches. 

The Regular or Standard Size of Patent Coated and Solid 
Manila Board is 24 x 36, containing 864 square inches. 

Regular Number — The Regular Number indicates the number 
of sheets, 26 x 38 in size, in a bundle of 50 lbs. 

To Determine Count of Odd Size[ Sheets — If not sure of the 
Regular Number of the board desired, determine same by Gauge 
List. Divide the number of square inches in a bundle of the 
regular number desired, by the square inches in the special size 
sheet desired, and the result is the "count" Or "number" of the 
special size desired. 

To Determine Regular Number of Any Special Size — Know- 
ing the count of the special size, multiply the square inches in 
special size sheet by the count, the result being the square inches 
in the bundle. Divide the square inches of the special size by 
the square inches in a regular sheet (26x38 = 988), and the 
result is the "regular number." 

Basis of Gauge Lists — The size referred to in all the Gauge 
Lists, excepting Patent Coated and Manila Boards, is the regular 
size 26 x 38, containing 50 lbs. to the bundle. 

The gauge list and ream weights of Patent Coated and 
Manila Boards is based on the ream, 24 x 36, 500 sheets. 



Addenda 251 

DIRECTIONS FOR ORDERING 

If purchasers will follow these directions it will greatly as- 
sist in giving the best possible service, without delays and errors. 

Quantity — State quantity of each item desired, and if special 
size, weight or grade is ordered, the maximum and minimum 
quantity acceptable should be given (see reservations Nos. 6 
and 8). The quantity should not be less than one ton of each 
item. It is necessary to have orders for at least five tons of any 
special grade. 

Size — In all cases, whether ordering regular stock or special 
sizes, state sizes wanted in inches (see reservation No. 9). When 
ordering roll stock, give width of roll in inches; also maximum 
and minimum diameter, and the size and kind of center. 

Weight or Thickness — Specify the number of sheets wanted 
of the size ordered in each 50-lb. bundle, or the weight per ream 
or the caliper thickness. If the special size which may be 
ordered is to be made on the basis of a regular number or weight, 
state that fact clearly. If in doubt about the number, weight or 
thickness desired, send a sample showing exactly what is wanted 
(see reservation No. 6). 

Kind and Quality — State clearly the kind and quality desired, 
using the names of the several grades referred to in this book. 
If in doubt as to the name of the grade desired, send sample 
showing what is wanted. 

Finish — In all cases indicate the finish desired. When no 
specifications of finish are given it is customary to ship medium 
finish, except that Manila board, combination and other folding 
box boards will be made with the regular high finish unless 
specified otherwise. 

Grain — Unless instructed to the contrary, the grain of Sheet 
board will be made the way of the last specification of the size, 
i. e., 26 x 38 would indicate the grain to run the 38-inch way, 
and 38 x 26 would indicate the grain to run the 26-inch way. 
Whenever grain may run either way, that fact should be noted 
on the order. 

Special Requirements — State clearly all special requirements 
for each item, and when convenient describe any unusual or 
special use for which the product is wanted. 

Colors — Always submit sample showing color desired (see 
reservation No. 10). 

Shipping Instructions — Give name of consignee and destina- 
tion. Mills reserve the right to route all goods sold at delivered 
prices. Give date of shipment desired. 

For shipments to points in any territory where arbitrary or 
local freight rates are charged, such additional charges will be 
added to the price quoted for deliveries in said territory. 



252 Manual of Cost Engineering and Estimating 

RESERVATIONS 
All orders accepted are subject to the following reserva- 
tions : 

1. Prices quoted are subject to change without notice. 

2. Orders are not subject to cancellation or changes after 
acceptance without written consent. 

3. Orders should always be in the form of specifications of 
quantity, sizes and weights or count, with a date for shipment. 
Specifications may be changed if provided for when order is 
placed, and if stock has not been made. 

4. All promises of shipment are made subject to the unfore- 
seen or unavoidable delays, either at mills or while in transit. 

5. No claims, allowances or damages will be entertained 
unless reported on arrival of goods and before using any portion 
thereof. 

6. The manufacturer does not agree to make the exact caliper, 
count or basis of weight ordered, but reserves the minimum 
variation of five per cent either way in both count and caliper, 
and in no case less than one point in thickness. 

7. The Manufacturer does not guarantee surface measure- 
ment of box board made in rolls. 

8. Orders for special sizes, weights, colors or grades will be 
accepted on the following conditions: 

For quantities of — 

Five tons or less, a variation either way, 25% in amount 
Ten tons or less, a variation either way, 20% in amount 
Fifteen tons or less, a variation either way, 15% in amount 
Twenty tons or less, a variation either way, 10% in amount 

9. Quotations for all Box Boards and special products are 
based on cutting off at the end of the machine to approximate 
length, and shipping in unprotected bundles, unless otherwise 
specified herein. The Manufacturer will furnish such sizes so 
cut that exact size specified may be trimmed from the sheet fur- 
nished. Squaring, trimming, or special packing must be clearly 
specified, for which an extra charge is made. 

10. The Manufacturer does not undertake to exactly match 
any shade or color of any product he makes, but will duplicate 
colors and shades as nearly as possible, in the grade of product 
to be colored. 

11. The Manufacturer does not guarantee board for clay coat- 
ing mill work in quality, finish, thickness, waste or folding 
strength, after coating. The acceptance of the stock by the Coat- 
ing Mill is considered an acceptance by the purchaser. 



Addenda 253 

TERMS 

All accounts are due net in thirty days from date of shipment. 

Two per cent cash discount if paid within fifteen days from 
date of shipment. 

Any freight deductions made are conditional on the sur- 
render of paid expense bills. 

EXTRA CHARGES 

All quotations for Box Boards are made subject to extra 
charges for the following items except when otherwise clearly 
stated : 

Rolls narrower than 10 inches per ton $ 

Sheets narrower than 10 inches or shorter 

than 20 inches per ton 

Re-cutting or squaring per ton 

Re-winding per ton 

Waterproofing per ton 

Hard sizing (one side) per ton 

Banding or sealing per ton 

Casing per ton 

Crating per ton 

Strapping (cases- or crates) per ton 

Framing per ton 

Extra for cores 

Burlapping, baling and other special packing quoted on ap- 
plication. 

EXTRA CHARGES ON STRAW BOARD 

Single Feather Edge $ 

Double Feather Edge 

White News Mill Lining 

White News Sheet Lining 

Manila and Colored News (Mill or Sheet Lining) 

EXTRA CHARGES ON PLAIN CHIP— SOLID JUTE 

White News Mill Lining $. 

White News Sheet Lining 

Manila and Colored (Mill or Sheet Lining) 

Book Lining 

Oak Graining ... 

Marble Graining 

Cedar Graining 

The above grade is finished fifty pounds to the bundle, tied 
with two strings; if finished in reams, or side and end wrapped 
with four strings, an additional charge will be made. 



254 Manual of Cost Engineering and Estimating 



FORM OF UNIFORM ORDER BLANK FOR BOX BOARDS 

Recommended by the Box Board & Paper Committee of the 
Western Paper Box Manufacturers Association. 

ORDER BLANK FOR BOXBOARDS 



Order No.. 



Date. 



hip Via_; 



Ship to . 



When to Ship_ 
Terms 



F.O.B.. 



Tons Bundles Size 26x38 Count Caliper Finish 



Kind of Board and Lining 



Signed- 



The grain must i 
Remarks: 



1 the way of the second ! 



No change may be made without our consent 



Where onr members know what the basis Is and the count also, they will please put it down in columns 4 and 5. 
The word "Count" at the top of the fifth column means the number of sheets that yon expect to a bundle. 

If you know the basis that yon wish the board and you don't know how many sheets it should count to the bundle, don't put any- 
thing down under "count.** 

It is not absolutely necesaary to put anything in the column under the word "Caliper," but you should always do so under "Finish." 



Paper Trade Customs 

Glazed and Fancy Paper Manufacturers Association 
1. All prices are to be based for paper in rolls on the ream 
of 500 sheets of the following standard sizes, viz: 

Ordinary Glazed, Plated and Printed Papers, basis 20" x 24". 

Ex. Fine Glazed, Waterproof Finished and Embossed, basis 
20" x 25". 



Addenda 255 

2. Standard Rolls. Widths— Ordinary Glazed, Plated and 
Printed Papers, 24" or 26" wide. 

Ex. Fine Glazed, Waterproof Finished and Embossed 25" 
wide. 

Contents — Glazed, Plated, Printed or any flat surfaced paper 
not weighing over 30 lbs. to ream 20" x 24". Not less than 3 reams 
to a roll. 

Weighing over 30 lbs. to ream 20" x 24". Not less than 2 
reams to a roll. 

All papers with embossed surface. Not less than 1 ream to 
a roll. 

3. Extra Charges for Sheeting, Slitting, etc. 

(a) Sheeting case lots or more 15c per ream base sizes. 
Sheeting less case lots 25c per ream base sizes. 

Other sizes in proportion. 

(b) Slitting in reels not less than 25c per ream base sizes. 

(c) All orders for special sizes to be cut or slit from stock 
rolls, must be arranged to consume entire contents of a roll or 
rolls. 

4. Special colors and qualities. The minimum quantity to 
be accepted at regular rates to be equal to 25 reams 20" x 24" or 
20" x 25". If less than 25 reams there shall be an advance in 
price, depending upon cost of production. 

5. On all special runs the usual normal variations in quality 
and shade shall be accepted. Such orders shall be subject to 
overruns or underruns as follows: 

Orders of 25 to 49 reams 25% 

Orders of 50 to 99 reams 20% 

Orders of 100 reams and over 10% 

and deliveries so made shall be considered as an execution of 
the order. 

6. Special prices for exceptional quantities shall not apply 
to small quantities, or ream prices for broken lots from stock; 
in quoting prices for case lots, a case lot shall be 25 reams of 
the base size or its equivalent. 

7. All claims must be made within ten days from receipt 
of goods. No claims will be allowed on goods changed from the 
condition in which they were delivered. 

8. All goods shipped at buyer's risk. Express and parcel 
post deliveries, to be at cost of the receiver. 

9. All "make and hold" orders must specify an ultimate date 
for shipment, at which date goods are to be billed and the in- 



256 Manual of Cost Engineering and Estimating 

voices taken to account by customer whether ordered shipped 
or not. 

10. Terms, 3% for cash, being payment in thirty days, net 
31 days. 

11. Prices and quotations subject to change without notice. 
All orders, contracts, and agreements, are contingent upon strikes, 
fires, accidents or causes beyond our control. 

FORM OF UNIFORM ORDER RLANK FOR PAPER 

Recommended by the Rox Roard and Paper Committee of Western 
Paper Rox Manufacturers Association. 



To 



ORDER BLANK FOR PAPER 

Ordei No- 



Ship lo 



Date 

Ship Via_ 



When to Ship- 
Terms 



J9I_ 



Your No. Our No Size ol Sheet 



Price Basis 



Remarks 



Signed. 



Addenda 257 

Safe Short Cuts in Estimating 
A Paper by W. C. Carlson 

In preparing this paper on Safe Short Cuts in Estimating, I 
will endeavor to touch on several things that I consider are in 
connection and essential to safe short cuts. So vital and import- 
ant is the matter of accurate estimating that it ought to receive 
the best attention of every manufacturer. There should be no 
room for guesswork, as it is deceiving and often disastrous. In 
order to estimate accurately, the estimator must have practical 
knowledge of how a box is to be constructed, also know thor- 
oughly every manufacturing operation and detail. Without this 
knowledge, an estimator is working under great difficulty. Very 
often the estimator is merely a man, of figures and has little or 
no conception of practical boxmaking and does not know the 
proper and just prices to set for piecework operations. These 
great varieties of operation can only be well and accurately 
estimated by a man of tact, experience and expert judgment. In 
order to have an estimating system produce safe short cuts, it is 
essential to have an estimating sheet that is perfect in every de- 
tail. It must bear every operation of labor and every item of 
material. A complete estimate blank is a safe short cut, as it 
reminds you to get in every operation and all material connected 
with a job. The estimating blank should be printed so as to 
eliminate all writing possible. Print every detail that is likely 
to be needed in estimating any style box or job, or have a differ- 
ent set of estimate blanks for each different class of boxes. By 
doing this it saves the estimator a lot of writing that could 
be just as well embodied and printed on the estimate. In these 
short cuts I wish to say a few words regarding filing estimates 
for quick and handy reference. There are a few ways they can 
be handled so as to consume the least possible time in filing 
and handling. 

Sometimes they are often referred to and if they can be 
readily located it will save a lot of time. In my opinion, an 
estimate should not be made more than one on a sheet, and not 
in a bound book, as I believe some handle them. An individual 
estimate blank, in my opinion, is the quickest and safest. A 
loose leaf book is not advisable, for the reason that often two 
or three people in the office will want to refer to an estimate 
on different jobs at the same time. Having more than one esti- 
mate on a sheet has its faults, owing to many estimates becom- 
ing obsolete, and in time it means an endless time to recopy and 
transfer. You not only have to copy the dead ones, but the live 
ones have to be transferred also. A card system for filing esti- 
mates is an excellent one, properly arranged in alphabetical order 
and with individual pockets for a firm when there are quantities 



258 Manual of Cost Engineering and Estimating 

of them. For good and handy reference, a system of filing boxes 
to fit the estimate blanks from A to Z, is a quick way to file, plac- 
ing a clip on each firm's lot. If filed in this manner, a separate 
file should be arranged for the different grades of boxes; that 
is, a folding box should not be filed with estimates on set up 
boxes. In many cases a customer uses several kinds of different 
grades, and if filed separately it eliminates a lot of time and is 
a short cut in picking out the estimates wanted. The estimator 
should have a copy of the sizes of all presses and a list of the 
minimum and maximum sizes of boxes or sheets that each ma- 
chine or press will handle, instead of having to get this infor- 
mation each time from delayed sources. The estimator should 
also have an index book containing all up-to-date buying prices 
on all material. In many cases the estimator also does the buy- 
ing, but when the buying and estimating is done by two separate 
persons, then safe short cuts cannot be done without the esti- 
mator consulting the buyer many times a day, inquiring from the 
buyer the cost of different materials. 

With an index purchasing book at his disposal, properly 
kept up, it's a short cut for him and a time saver to the buyer. 
The estimator should also be equipped with a card index on 
which to keep a record of all piecework rates and test runs. 
Also cost sheet information taken from actual runs. This not 
only helps the estimator to make a safe estimate, but it is a big 
time saver and assures accuracy. He should know the approxi- 
mate weight per ream of all kinds of paper, so as to add the 
freight to the buying price. The paper varies quite a little in 
different weights: Bronze Glazed runs about 22 pounds to the 
ream; White Linen, 44; Double Coated White, 37, and Skytogens 
approximately 29 pounds. He should also have a copy of the 
freight and express rates from points where material is pur- 
chased. He should be equipped with calculating books and tables 
to eliminate all unnecessary figuring when a table will produce 
results wanted instantly. 

I have here several short cut estimating tables and books. 
Anyone may inspect them if they wish. I refer you to a set of 
tables published by the Shears, of Lafayette, Ind. One gives the 
cost of strawboard per hundred sheets; another gives the cost 
for a hundred sheets of paper; the third one gives average table 
for strawboard. These three tables are handy references for 
any estimator. I am also pleased to refer you to a book sold by 
the American Boxmaker, of Chicago, price of which I believe is 
$30. This book is called the "Calcule." This book is very com- 
plete, giving many sets of tables. Estimating tables for costs and 
selling prices are not printed in calcule for obvious reasons, but 
a half dozen methods or helpful hints could be demonstrated in 



Addenda 259 

five minutes, showing calcule to be almost indispensable in this 
work. When stock is bought right and received with care, there 
always remains the countless number of times when it must be 
known: What is the count of a slightly different size or weight 
sheet? What is the weight per thousand sheets or ream? What 
is the weight per thousand square feet? I believe Mr. Hoy is 
here at the Convention, and no doubt he will be glad to explain 
the merit of this rapid calculating book to any who are interested. 
I also have here for inspection the Proportionate Weight Calcu- 
lator, which is sold by the District of Columbia Paper Manufac- 
turers, of Washington, D. C, price of which is $5. It is an 
aluminum chart that very rapidly gives you the count of special 
sizes of board and also the special sizes of paper. It has been 
verified a great many times and found to be absolutely correct. 
This device saves a great amount of figuring where you are using 
special sizes, and ought to be of great assistance to any paper 
box man. 

For the inspection of our members I have here style No. 520, 
Burroughs Adding Machine, price of which is $150. This ma- 
chine is a very handy article for the estimator to have on his 
desk. It's a great help and convenience. An estimate to be safe 
should be totaled on an adding machine. It also multiplies and 
subtracts. 

This machine will add and subtract. I believe Mr. Pike, who 
represents the Burroughs Adding Machine, is here and will be 
glad to demonstrate to any of the members. He claims if a box 
man figures below cost, the entire machine will immediately turn 
red. Here is a small adding machine, which is called the Calcu- 
meter 8-dial, price of which is $25, sold by Herbert North Morse, 
of Trenton, N. J., absolutely accurate, light in weight and con- 
sumes hardly any room at all on the desk. Any of these articles 
that I have shown you will short-cut estimating. 

In estimating, short cuts should be used wherever practicable, 
as without them estimating would consume an endless amount 
of time. Most anyone with a good knowledge of mathematics 
has many fixed rules to follow, the amount of these varying with 
the ability of the individual. One often finds great use for safe 
short cuts, as sometimes a box is so constructed that it requires 
in the neighborhood of fifty separate calculations to acquire the 
cost of the material, to say nothing of the labor items. Anyone 
who does a great deal of figuring, whether in estimating or in 
other classes of work, will agree that the first rudiments in rapid 
calculation are to reduce your figures to as small units as pos- 
sible. Thus, in beginning, if we commence with board, it is far 
easier to get the cost of a given number of sheets by using cost 
per sheet instead of per bundle or per ton. By this means many 



260 Manual of Cost Engineering and Estimating 

a cost can be figured mentally. Take, for instance : Sixty sheets, 
count 50 board at $24 per ton. If you stop to figure what pro- 
portion this amount of board is of the bundle or of the ton, it 
will take two separate calculations to arrive at the cost. By re- 
ducing the cost to so much a sheet, in this case, we simply multi- 
ply cost — .012 (twelve thousandths) by 60, which gives us 72c. 

In using these fractional costs per unit in arriving at cost of 
larger quantities much time can be saved by the following method. 
For example: 295 sheets at .012 cost $2.95, plus 59, which equals 
43.54. This result is obtained by taking the sum and adding l-5c 
of itself, as .012 equals 1 l-5c. This method can always be used 
to advantage where the cost does not go over 3 or 4 cents and a 
fraction per unit. 

In figuring cost of papers, as a general rule, on all ream 
papers of any consequence, the easiest way is to figure by cost 
per 100 sheets. This is a good short cut in figuring paper for 
boxes that are finishing on the stripping and topping machines, 
with which a good many are no doubt familiar. After arriving 
at the total square inches of paper necessary to strip box, cover 
and also top, multiply this sum by two, which gives us the 
amount of sheets needed per 1,000. In using this form, care must 
be exercised in allowing for turn in on box and cover, and also 
a fixed percentage for waste, which is always far greater in roll 
than in sheet stock. On a great many kinds of cheap paper a 
fixed rate per M can be used in arriving at cost of material. 
Print and book papers, for bottom labeling, for corners, trim- 
ming and for reinforcement, it is a very good plan and time saver 
to figure cost of paper at so much per square inch per M. 

Cloth trim, hinges and corners should also be estimated in 
this manner. Of course, we know that nearly all costs are derived 
by multiplication. It is here that the estimator can use his knowl- 
edge to advantage. Some men can multiply by double figures 
almost as rapidly as by single. This naturally comes from 
practice, but there are innumerable ways to eliminating multipli- 
cation, which, as all will agree, is the slowest process. Here 
are a few examples: If 424 sheets cost 75c per C, to find cost 
quickly, deduct 1/4 of 424 from this amount, which leaves $3.18 
as cost. To prove this, let me explain that by figuring this paper 
at $1 per C, sheets would cost $4.24. As 75c is 1/4 less than $1, 
by deducting $1.06 (1/4) from $4.24, you can arrive at your 
answer in quick fashion. The same rule can be applied in differ- 
ent fractions with time saving results. There is an old rule we 
used to learn in school which reads, "To multiply by 25, divide 
by 100 and then multiply by 4." This bears out my argument 
of reducing to small units at every chance that arises. Take this 
one: If paper cost 95c per C, or board 95c per bundle, and you 



Addenda 261 

have the amount of stock necessary, instead of multiplying by 
95c, simply take the difference between 95c and $1, which is 
5c, and use this for arriving at your cost. There are two short 
cuts available here. Paper at 95c costs 5 per cent less than $1 
paper; to find the cost of 640 sheets deduct 5 per cent, or 32, 
from 640. The other way to get results quickly is to consider 
5 per cent as 1/20. Deduct 1/20, or 32, from 640, and you have 
your answer, and both these operations should be done mentally 
and consume but a fraction of time. 

One member informs me that he handles some of his esti- 
mates in this manner: "I use fixed rates. For instance: My 
cases at l%c per cu. ft. Staying on 1-pound box, 75c per thou- 
sand. This would include bundling, handling, waste material, 
etc. This is for single staying only. For S. & S. work, instead 
of dividing the operations and accounting for each one separately, 
I include the gluing, feeding, bundling and handling, making a 
fixed rate which embraces all the operations, varying according 
to size of box." This may be a short cut, but doubtful if it is 
accurate and safe. 

Another member writes me as follows: "For instance, I 
never think of figuring the board and lining paper as two sepa- 
rate items. A sheet lined board at $24 per ton, on the basis of 
60, is figured at 84c per bundle. Glazed paper is figured on the 
square inch basis on the roll, rather than to figure the pieces 
used for a box, and then figure out how many sheets 20 x 24 
inches are required. Instead of figuring the lid paper separate 
from the box paper, it is figured together; that is, if the box re- 
quires 20 inches in length and 3 inches in width and the lid 1% 
inches in width, then you simply find how many square inches 
are to be used by multiplying the length by the width of the two 
strips aggregating 4% inches in width. This is also true of glue. 
We know that so many pounds of a certain grade of glue will 
cover so many square inches; hence when we have the number 
of sheets required to make up 1,000 boxes, we know how much 
glue is required also. Stay material we have figured on the basis 
of so much per thousand inches, so you see it is very simple to 
know how much the stay material would cost on 1,000 boxes, 
knowing the number of inches of stay material required." 

Many short cuts can be gotten up by each member if they 
will only devote a little time and study to them, which will fit 
their particular need and which will save much time, and fre- 
quently much labor, too. No doubt a great many of you have 
done the same as I have, and that is to figure out thousands of 
times a year how much lace, cambric corners and cloth hinges 
it takes for a thousand boxes, and the cost of it. That is cer- 
tainly a waste of good valuable time. 



262 Manual of Cost Engineering and Estimating 

I have prepared a few charts showing the cost of lace for a 
box 5 inches, 7 inches, or any other length. The only thing that 
will change the price on this chart is the change of your pur- 
chase price of lace per thousand strips. This, of course, will 
need attention. 



Pricelist onLaceby the inchperMboxes2kcemBox 



Width 

Lb. 



length 



3" 



3fc' 



44" 



7F 



8" 



84* 



94 



10 



104" 



506 



'/2 



22i' 



.45 



13 



15 



18 



18 



23 



23 



.30 



30 



.10 



30 



45454545.45454545 



514 



22£ 



.60 



,18 



.20 



24 



24 



30 



30 



40404040 



.60.60 



.6060 



.60606060 



350 



'/2 



23' 



.70 



2024 



28 



28 



.35 



3547 



.47474770 



.70 



.70707070 



70 



70 



355 



23' 



■1£ 



21 



25 



3030 



38 



38 



50505050 



75 



75 



75 



75 



75 



75 



7575 



360 



23" 



I.IO 



32 



37 



444455 



5574 



7474 



74 



1.10 



1.10 



.10 



.10 



no 



!.I0 



1.10 



1.10 



544 



23" 



.80 



23 



.27 



32 



32 40 



40 



54 54 54 54 80 80 80 



.80 



50808080 



552 



23' 



1.05 



3035 



42425353 



70707070 



1.0511.05 



1.051.05 



1.05 1.05 1.05 1051 



The first column is the manufacturer's number of lace. Sec- 
ond column, width of lace for half, one, two and five pound 
manufacturer's number, with the note whether they are open or 
linen lace. Next column is the length of the lace that strips 
come in, and there is the price per 1,000 strips. If you want 
lace for a thousand boxes, No. 566, on a half-pound box 7% inches 
long, the chart shows you it will cost 30 cents. If you want No. 
355, on a 1-pound box 7% inches long, it will cost 50 cents; the 
same number on a 3-inch box will cost 21 cents. You will note 
that from 8-inch to 11%-inch price does not vary. That is on 
account of 8-inch not cutting well into 22% -inch. You can see 
there is a large waste. If you have something that you can cut 
the waste into, you can make allowance for it if you wish. The 
5-inch costs $1.05, the 4-inch costs 42 cents, 11%-inch, $1.05. This 
table once figured out will stop all future figuring. We have 
done it. We have figured dozens and dozens of times on the 
same size until adopting this method. 

The same principle applies to cambric corners or hinges. 
It is absolutely unnecessary to keep figuring these items over 
and over again, possibly several times in one day. 



5 



6" 



7 



8 



["W!DE 
| J4"WIDE 
I^WIDE 



36 
45 
.54 



.4554 



6372 
.7990 



t8l 
101 



.951.08122 



lo uy 

9099108 
IB|25|35 

IM49S62 



Addenda 



263 



Another chart, which will apply to Manila hinges and cor- 
ners — this is especially handy if boxes are cornered by hand for 
boxes too deep for stayers. 



MANILLA 
CORNERS 


5" 


6 


7 


8 9 


10 


| WIDE 


.18 


11 


25 


.2932 


.36 


|J4'WIDE 


.23 


U 


32364(1 


45 



For figuring bottom labels of print paper a square inch table 
is quick and accurate. This table, however, should be used for 
figuring roll paper only. 

Chart for print papers 3 cents per pound 26-inch roll. If 
you have a box 5 x 6 to equal 30 square inches, paper will cost 
10 cents. On a box 4x11 to equal 44 square inches, paper will 
cost 15 cents. This chart is, for roll paper only. If you make 
a chart, it should be worked out 35, 40, 45, 50, and so on. 

Bottom Label-Print Paper 

COST PERM BOXES 



PRICE 

PER LB. 


Size 


3or 


A1SQU. 

TT in. 


69?:. 


66T 


.03 


26"^ .10 


.15 


.23 


.29 



FOR ROLL PAPER ONLY 

In many cases the estimator makes out the orders for the 
factory, or it is done under his supervision. It is quite a job to 
transfer all figures necessary from an estimate blank to the fac- 
tory order, and here is where a short cut saves a lot of time. 
Some boxmakers that I know copy nearly the entire estimate 
every time the job is entered on repeat orders. This is a large 
waste of time, and also gives chance for errors in copying. 

Here is a factory order blank that once made out properly 
never has to be recopied as long as the size and specifications 
remain the same as originally figured. All that is necessary is to 
write in the date, order number and quantity to be run. 



264 Manual of Cost Engineering and Estimating 



Cover/VAX £ft 

Size of Layer X 

Size of Tray X X NvtniW of Box ^ ^ 

Customer /OAstTUsv^Siie / ? _■* </ v ? 



ORDER 

r 7&1 



_Cover-2 



&= ,BOX-JfTv CD * 



BoxNo^o^ytjgxyy SheetsWfiife 



flfflE 



ORERNQ 



AMT. 



COVER — . v .- f rv- 

*? ,? color * #o 



Bo ^"0EPT. 



^ 



^^ 



'a a 4y^ I 



CaveTNo-goFL^Jo xy^_ Sheets and inils 



4 



EndsNo. 



Sheets 



TwwNa. P.L 



5lllU>t 



IWlNt>. PL 



?>»,»(> 



IuiioNo PL 



Sh»»W» 



NockNa 



ChwU 



gglwojjgin I'.mli ClwlU ISowWw 



^Lfl. 



5cl mi> Bow IhwJ! Clmlu Imu Win 



SuUmiftmi ftw>h Cluw* lumWni 



Conn ftww 



s* 



Ccmiih Cmim 



Tom 1>» Mmiiu 



£0 



tow huHwwi 



fallow by Mimhm 



PoUant hw Hjiad 



Inmli l.nlil 



Llli»! ftg»! 



LjhijtwjWM 



5l»»>i 



limn Mm 



_Tk 



Noat 



Tnu l.i 



Slwn Wojjj foiwh 



Nail \Mawl ftwwU 



Z2 



Chw iw JlhwHii 



Sjnij (Una 



>*»whw 5c> U»> 



ftnwhwGuo >>» 



L. 



(1 nun i 



W(Wt> jVlWH 



>(»»» lUutil 



Out m >»»»>> 



to. 



I'wiW RfijUjJlj jhjj 



law BiiUiMi C*>»>u 0» 
CUuwi 



^o 



Addenda 265 

This factory order blank should bear each operation of 
labor. Also each item of material that is on your estimate. This 
column is for your labor piecework prices. These columns are 
for your board. If a repeat order comes in, all that is necessary 
is to insert the date, order 1 number and quantity to be run. It 
only takes a half a minute to enter. I haven't all the items printed 
in on account of the fact that every firm would probably want a 
different form. Piecework prices are all on here, and, remem- 
ber, they are exactly the same as they are on your estimate. 
That is where a good many go wrong. When the piecework prices 
are all on here they never change, and it is up to your foreman 
to see that those prices are paid to the help. You figure one price 
in the office and the factory is paying another. You also have 
the play size, which once correct, always remains. 

You have got the size blank of your box and cover, which is 
very handy for the cutter. Any employee in your factory without 
any of this wording can tell immediately what these abbreviations 
mean. It only takes very little time for employees, both in the 
office and in the factory to get acquainted with them, and they 
can read them just as quickly as the stenographer can read her 
shorthand. 

When the first order is entered your cutters and foremen are 
given all the information needed; nothing is lacking. Play of 
cover, size and grade of board and paper. It also bears all piece- 
work prices to be paid to hand and machine workers. This is 
truly a safe short cut. 

A good many of you use cloth corners and hinges. I have 
only a little piece of this chart figured out, because none of you 
have anything to do when you get home, and you can figure it 
yourself. Cloth corners or hinges, cloth 24 x 36 at 6 cents a yard 
for 1,000 boxes 8x1, costs $1.12. You will note on this chart I 
have the cloth figured out in inches. Also one and a quarter 
inches. Charts can be figured out so as to make any width de- 
sired, also any length. Manila chart is on the same order as the 
cloth, $2.50 per ream, size 30 x 42, 1,000 boxes 4 inches deep, 
cost 9 cents, 8 inches deep cost 16 cents, 6 inches, 14 cents. 

I may be getting a little off my subject, but I wish to show 
and explain some short cuts in abbreviation of words that are 
written thousands of times a day in paper box factories, not only 
by the estimator, but by your foremen, cost and bill clerks. These 
can be used to very good advantage, and you will be surprised 
how readily your employees will be able to cipher the meaning 
of them. 

Here is a drawing of a boxmaker who does not use any safe 
short cuts in estimating. He prefers to stay in his office until 10 



266 Manual of Cost Engineering and Estimating 



-ABBREVIATIONS 



BY HAND 

STRIP 
BLOCK 



" llABEL I T OP ——BOTTOM ^FLY —TAPE 

*£tIETAPE IlACE — O STITCHER f^NEST Af " ^ 

e FINISH ^.^fQOLUEIN I ITRIM ffl 
COMPLETE V Cl05E U BLOCK U BLOCK QJ 

O FRAME | MANILLA _ DOUBLE f* LINE 

COMPLETE I DOUBLE STRIP ~ GILT cfe BOX 

DOME ,trayI drop (P PAD -^- EX - o EX - 

I CFRONT JL.TOP ° BOHOM — TOP 



SPS.SCS^W~-»CSS» B 



TRIM 
BOX 



o'clock at night figuring by old methods, while the more progres- 
sive boxmakers are home with their families — maybe. 

In closing, I wish to tell a story I heard a short time ago. 
This story explains a short cut in estimating, but it is not a safe 
short cut. Two Jews started in the paper box business — Ikey 
and Abe. Ikey was a practical boxmaker, while Abe was not. 
So Ikey with his experience took the running of the shop and 
Abe went out on the street soliciting business. Things ran along 
for a while without making any money; in fact, their funds were 
vanishing. So Ikey went to his banker and tried to negotiate a 
small loan. The banker asked him several questions and also 
wanted to know how they were getting along. He told the banker 
that they were getting along better the last few weeks since they 
had made a change, as he was now to do the soliciting and Abe 
was to run the shop. The banker could not quite see this, and 
told Ikey, inasmuch as he was a practical man, his place was to 
run the shop, and Ikey explained: "Veil, I'm a better guesser 
than Abe — Abe was a rotten guesser." Gentlemen,, I thank you. 



Addenda 



267 



Oiill Estimating* 




PART II 

Committee's Note — Gauge Lists — Ream Weight Tables — 
Equalization Tables for Box Boards — Shears' Quick Calculating 
Average Tables for Strawboard — Rules for Finding Count of 
Coated Board — Weight and Cost of Coated Board — Cost of Board 
per 100 Sheets, Nos. 10 to 120, at from $20 to $90 Per Ton— Tables 
Showing Cost of Sheet Lining per Sheet at from 40 Cents to $1.75 
Per Hundred Sheets — Paper Equivalent Tables — The Equivalen- 
tor — Slide Rules — Quick Paper Rules — Strip Paper Table — Table 
Showing Cost Per Hundred Sheets of Paper — Shears' Estimating 
Tables — Proportionate Ream Prices — Cost of Paper Per 1000 
Square Inches — Cost of Paper, 20 x 24 Per Ream, Per 1000 Square 
Inches, and Per Sheet — Cost of Trim Paper Per 1000 Running 
Inches — Cost of Gummed Kraft Per 1000 Running Inches — Stay 
Paper Required Per 1000 Boxes or Lids — Strip Cutting Tables — 
Cost Per 1000 Running Inches Strip Paper — Cost per 1000 Run- 
ning Inches Muslin Strips — Box Twine Table — Table Showing 
Cost Per 1000 Running Inches Metal Edge — Table Showing Cost 
Per 1000 Running Inches Metal Stitch Wire — Glue and Gums — 
Waste and Spoilage. 

Committee's Note 

In the following pages the Joint Cost Committee of the Na- 
tional Federation of Paper Box Manufacturers Association has 
endeavored to present to the Paper Box Making Industry, such 
information and data as has been considered of value and assist- 
ance to the estimator in figuring cost. The tables have been com- 
piled from data contributed by the members and from all avail- 
able sources and the committee takes this opportunity of thank- 
ing the contributors for the assistance given. 

These tables have been compiled with great care and a vast 
amount of time given to the work, but infallibility can not be 
assured, no responsibility is assumed. 

The committee, however, will appreciate being notified of 
any errors so that they can be corrected. It is the intention of 
the committee to have editions of these tables reprinted from 
time to time together with the revised Hourly Cost Rates and 
Hourly Output Rates, and all information and additions that may 
be of service to the industry, and further the general adoption 
of the Uniform Estimating and Cost Finding Methods. 

It will probably be found convenient to have extra copies 
of these tables for the estimator's quick reference. 

Should sufficient demand develop, the committee will have 
printed extra copies of the tables that will be sold at a nominal 
charge, so that the estimator can have them in convenient form. 

JOINT COST COMMITTEE. 

Henry L. Stortz, Secretary. 



Addenda 



269 



Gauge List No. 1 

FOR PLAIN STRAW AND PLAIN CHIP ROARDS 

Solid Jute, dry finish; Filled Wood Pulp, Filled News Roard, 
Single News Vat Lined Chip and Single White Vat Lined Chip. 

No. 1 Finish No. 3 Finish 

Basis 26 x 38 Thick to No. No. 2 Finish Thin to No. No. 4 Finish 

and Rough Medium and Smooth Extra Smooth 

No. 35 .064 .060 .057 .051 

No. 40 .056 .053 .050 .045 

No. 45 .050 .047 .045 .040 

No. 50 .045 .042 .040 .036 

No. 55 .041 .038 .036 .033 

No. 60 .038 .035 .033 .030 

No. 65 .035 .032 .030 .028 

No. 70 .032 .030 .028 .026 

No. 75 .030 .028 .027 .024 

No. 80 .028 .026 .025 .023 

No. 85 .026 .024 .023 .022 

No. 90 .025 .023 .022 .020 

No. 95 .024 .022 .021 .019 

No. 100 .022 .020 . .019 .018 

No. 110 .020 .019 .018 .017 

No. 120 .018 .017 .016 .015 

No. 130 .017 .016 .015 .014 

No. 140 .016 .015 .014 .013 

No. 150 .015 .014 .013 .012 

Arranged by the Box Board Manufacturers Association. 



270 Manual of Cost Engineering and Estimating 



Gauge List 

Cracker Shell Board 

Plain Shell Board, colored one 
side 

Colored Box Board, Chip Back 

Colored Box Board, Chip Cen- 
ter, News Back 

Any Combination Board with 
Solid News Back 

Any Combination Board with 
Solid Wood Back 

Single Manila Lined Chip 

Single Manila Lined Chip Cen- 
ter News Back 

Bleached Manila Lined Chip 

Bleached Manila Lined Chip 
Center News Back 

Double Manila Lined Chip and 
Manila Colored Shell 



No. 2 for 

Colored Suit Box Board Chip 

Back 
Colored Suit Box Board Chip 

Center News Back 
Mist Colored Suit Box Board 

Chip Back 
Mist Colored Suit Box Board 

Chip Center News Back 

Test Jute 

Test Chip Board 

Jute Lined Chip Board 

Jute Lined Chip Board News 
Back 

Imitation Jute 

Filled Jute (Chip Center) 

Solid Jute (Bending) 



No. 1 Finish No. 3 Finish 
Basis 26 x 38 Thick to No. No. 2 Finish Thin to No. No. 4 Finish 

and Rough Medium and Smooth Extra Smooth 

No. 40 .050 .047 .045 .043 

No. 45 .045 .043 .041 .038 

No. 50 .040 .038 .036 .034 

No. 55 .037 .035 .033 .031 

No. 60 .034 .032 .030 .028 

No. 65 .031 .030 .028 .026 

No. 70 .029 .028 .026 .024 

No. 75 .027 .026 .024 .023 

No. 80 .025 .024 .023 ,021 

No. 85 .024 .023 .022 .020 

No. 90 .023 .022 .020 .019 

No. 95 .022 .020 .019 .018 

No. 100 .020 .019 .018 .017 

No. 105 .019 .018 .017 .016 

No. 110 .018 .017 .016 .015 

No. 120 .017 .016 .015 .014 

No. 130 .016 .015 .014 .013 

No. 140 .015 .014 .013 .012 

No. 150 .014 .013 .012 .011 

Arranged by the Box Board Manufacturers Association. 



Addenda 



271 



Gauge List No. 3 

For Solid News and Solid Wood Pulp Board 

No. 1 Finish No. 3 Finish 

Basis 26 x 38 Thick to No. No. 2 Finish Thin to No. No. 4 Finish 

and Rough Medium and Smooth Extra Smooth 

No. 40 .063 .060 .055 .050 

No. 45 .056 .054 .050 .045 

No. 50 .050 .048 .044 .040 

No. 55 .046 .044 .040 .036 

No. 60 .042 .040 .037 .033 

No. 65 .039 .037 .034 .031 

No. 70 .036 .034 .031 .029 

No. 75 .033 .032 .029 .027 

No. 80 .031 .030 .027 .025 

No. 85 .029 .028 .026 .023 

No. 90 .028 .026 .024 .022 

No. 95 .026 .025 .023 .021 

No. 100 .025 .024 .022 .020 

No. 110 .022 .021 .020 .019 

No. 120 .021 .020 .019 .018 

No. 130 .020 .019 .018 .017 

No. 140 .019 .018 .017 .016 

No. 150 .018 .017 .016 .015 



Gauge List No. 4 

For Pasted Chip Board 

No. 2 Finish 

Basis 26 x 38 No. 1 Finish Thin to No. No. 3 Finish 

Medium and Smooth Extra Smooth 

No. 10 .212 .200 .180 

No. 15 .142 .133 .120 

No. 18 .113 .111 .100 

No. 20 .106 .100 .090 

No. 22 .096 .090 .082 

No. 25 .085 .080 .072 

No. 28 .076 .071 .064 

No. 30 .070 .067 .060 

No. 35 .060 .057 .051 

Arranged by the Box Board Manufacturers Association. 



272 Manual of Cost Engineering and Estimating 

Gauge List No. 5 

Container Board 

Basis 26 x 38 No. 3 Finish Test 

No. 15 .120 300 Lbs. 

No. 18 .100 275 Lbs. 

No. 23 .080 200 Lbs. 

No. 29 .060 175 Lbs. 

Furnished in 2, 3 or 4 Ply Pasted and conforms to Railway 
and Express requirements. 

Arranged by the Box Board Manufacturers Association. 



Gauge List No. 6 and Ream Weight Table 

For Patent Coated — Chip Back; Patent Coated — News 
Back; Patent Coated — News Center Manila Back; Patent 
Coated — Solid Manila Back; Patent Coated — Blue Back; Solid 
Manila Board. 



Caliper Thickness 


Basis 500 Sheets 

24x36 

(864 sq. in.) 

Lbs. 


Basis 500 Sheets 

25x40 

(1,000 sq. in.) 

Lbs. 


.011 


154 


178 


.012 


168 


194 


.013 


182 


210.60 


.014 


189 


217.60 


.015 


195 


225.69 


.016 


208 


240.70 


.017 


221 


255.78 


.018 


230 


266.20 


.019 


238 


274.88 


.020 


245 


283.56 


.021 


252 


291.66 


.022 


264 


305.55 


.023 


276 


319.44 


.024 


288 


333.33 


.025 


300 


347.21 


.026 


312 


361.10 


.027 


324 


374.99 


.028 


336 


388.88 


.029 


348 


402.77 


.030 


360 


416.65 



Furnished wrapped in reams or half-ream bundles. 



Addenda 273 



Rules for Figuring Weight of Odd Sizes 

Use the decimal table above, which is on the basis of 1,000 
sq. inches and is accurate. First find the square inches in the 
sheet wanted and multiply same by the decimal in 25 x 40 table 
above, then point off decimals and you will have the correct 
weight of the odd size per ream. EXAMPLE — 22 x 34.018 Patent 
Coated. 22 x 34 = 748 sq. in. x 260.14 lbs. == 195 pounds per ream. 

Arranged by the Box Board Manufacturers Association. 



Ream Weight Table 

For White Mill Blanks 

Gauge 

.015 
.018 
.021 
.024 
.030 
.036 

3 Ply to 5 Ply, inclusive, are wrapped in sealed packages of 
100 sheets. 

6 Ply and heavier are wrapped in sealed packages of 50 
sheets. 

Five packages are packed in a bundle not framed. 

Regular size, 22 x 28, carried in stock. Also 28 x 44. 

Special sizes and thicknesses will be made in lots of 5,000 
sheets to order. 

Special sizes are packed without sealed wrapping, in bundles, 
not framed. 

Arranged by the Box Board Manufacturers Association. 



'lies 


Weight per 100 Sheets 

Size 22 x 28 

Lbs. 


3 


140 


4 


160 


5 


180 


6 


205 


8 


260 





300 



274 Manual of Cost Engineering and Estimating 

Handy Tables of Box Board Equivalents 

EQUALIZATION TABLE 



26x38 


26y 2 x 39 


29x42 


31x41 


3iy 2 x 4iy 2 


32x44 


32y 2 x uy 2 


25 


24 


20 


19 


19 


18 


17 


30 


29 


24 


23 


22 % 


21 


20% 


35 


33 % 


28 


27 


26;% 


25 


24 


40 


38 


32 


31 


30 


28 


27 


45 


43 


36 


35 


34 


32 


31 


50 


48 


40 


39 


38 


35 


34 


55 


53 


44 


43 


41 


39 


37% 


60 


57 


49 


47 


45 


42 


41 


65 


62 


53 


51 


49 


46 


44 


70 


67 


57 


54 


53 


49 


48 


75 


72 


61 


58 


57 


53 


51 


80 


76% 


65 


62 


60 


56 


54% 


85 


81 


69 


66 


64 


60 


58 


90 


86 


73 


70 


68 


63 


61 


95 


91 


77 


74 


72 


66 


65 


100 


95% 


81 


78 


75 


70 


68 


110 


105 


89 


86 


83 


77 


75 


120 


115 


97 


93 


90 


84 


82 



Arranged by Philip Rudolph & Sons, Philadelphia. 
EQUALIZATION TABLE 

31 x 39 31 x 41 29 x 42 

No. 20= 25 regular No. 20 = 25 regular No. 20 = 25 regular 

25= 30 " 25= 32 " 25= 30 " 

30= 37 " 30= 38 " 30= 37 " 

35= 43 " 35= 45 " 35= 43 " 

40= 49 M 40= 51 " 40= 49 " 

45= 55 " 45= 58 " 45= 55 " 

50= 61 " 50= 64 " 50= 61 " 

55= 67 " 55= 70 " 55= 67 " 

60= 73 " 60= 77 " 60= 74 " 

65= 80 " 65= 83 " 65= 80 " 

70= 85 " 70= 90 " 70= 86 " 

75 = 92 " 75 = 96 " 75 = 92 " 

80= 98 " 80 = 103 " 80= 98 " 

85 = 104 " 85 = 109 " 85 = 104 " 

90 = 110 " 90 = 115 " 90 = 110 " 

95 = 116 " 95 = 122 " 95 = 117 " 

100 = 122 " 100 = 128 " 100 = 124 " 

Contributed by Henry L. Stortz. 

Complete set of Quick Calculating Average Tables for straw- 
board can be secured from Shears Publishing Co., Lafayette, Ind. 



Addenda 275 

Coated Board 

To find the number or count of a bundle 24 x 36 — 50 lbs. — 
ascertain the number of points or caliper standard box gauge. 

Rule: 

No. points X 2.5 f Cou * * of !> oar< ? 
— = ^in 1 bundle of 



5000 



[24 x 36—50 lbs. 



This is on the basis of 24 x 36 — 500 sheets to ream; 12% lbs. 
to the point. 

To find number of points or caliper standard gauge coated 
board. 

Rule : (Having the number or count of a bundle 24 x 36 — 
50 lbs.) : 

5000 - No. or count P* - P^nts 24 x 36. 
= ^500 sheets to ream. 



2-5 [12% lbs. to point. 

The weight of 100 sheets coated board = No. of points X 2.5. 

5000 



The count of 50 lb. bundle 24 x 36 



The count of 50 lb. bundle 24 x 36 = 



Weights of 100 sheets 
5000 



The count of 50 lb. Bdle. 26x38 



No. points X weight per point 2 

5000 

No.Pts. X wgt. per point 2 — 143% 
or 1/7 approximately 



The count of 50 lb. bundle, any size 



No. Pts. X weight per point 2 
— difference between surface 
of 24 x 36 (864) & size of sheet 



To find count of 50 lb. bundle, any size. 
This rule of proportion may be used: 

Rule: 864 : : : Surface of sheet : Count. 

Surface of 24 x 36 ^0. Pts. X 2.5 Desired Size 

Contributed by Henry L. Stortz. 



276 Manual of Cost Engineering and Estimating 





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280 Manual of Cost Engineering and Estimating 



Cost of Sheet Lining, 1/s Basis, 40c per 100 Sheets, 

26" x 38" 

COST SHOWN IN CENTS 



Size 


20 


22 


24 


26 


26£ 


27 


28 


29 


30 


31 


3H 


32 


32J 


33 


34 


35 


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24 
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26 
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32 
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34 
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36 
36 
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38 
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40 
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27 

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30 

30 

31 

32 

33 

34 

35 

36 

37 

37 

38 

38 

38 

39 

40 

40 

41 

42- 

43 

44 

45 


30 
31 
31 
31 
32 
32 
33 
33 
35 
35 
36 
37 
38 
39 
40 
41 
41 
41 
42 
43 
43 
44 
45 
46 
47 
48 
49 


32 
33 
33 
34 
34 
35 
35 
36 
37 
39 
39 
40 
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43 
43 
44 
44 
45 
45 
46 
47 
47 
48 
50 
51 
52 
53 


32 
33 
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36 
36 
37 
38 
39 
39 
41 
42 
43 
44 
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45 
46 
46 
47 
48 
48 
50 
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52 
53 
54 


33 

34 
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35 
36 
36 
37 
37 
38 
40 
41 
42 
42 
44 
45 
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46 
47 
47 
48 
49 
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50 
51 
53 
54 
55 


34 

35 
36 
36 
37 
38 
38 
39 
40 
41 
42 
43 
44 
45 
47 
47 
48 
48 
49 
50 
50 
51 
52 
53 
55 
56 
57 


35 
36 
37 

38 
38 
39 
39 
40 
41 
42 
43 
45 
47 
47 
48 
49 
49 
50 
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52 
52 
53 
54 
55 
56 
58 
59 


36 

38 
38 
39 
40 
40 
41 
41 
43 
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47 
49 
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51 
51 
52 
52 
54 
54 
55 
56 
57 
58 
60 
61 


38 
39 
40 
41 
41 
41 
42 
43 
44 
45 
46 
48 
48 
50 
51 
52 
53 
54 
54 
56 
56 
56 
57 
59 
61 
62 
63 


38 
39 
40 
41 
42 
42 
43 
43 
45 
46 
47 
49 
50 
51 
52 
52 
54 
54 
55 
56 
57 
57 
59 
60 
61 
62 
64 


39 
41 
41 
42 
42 
43 
44 
44 
45 
47 
48 
49 
50 
51 
53 
54 
54 
55 
56 
57 
57 
58 
60 
62 
62 
64 
65 


40 
41 
42 
42 
43 
44 
45 
46 
46 
47 
49 
50 
51 
53 
54 
55 
55 
56 
57 
58 
59 
60 
61 
62 
63 
65 
66 


40 
41 
42 
43 
44 
44 
45 
45 
47 
48 
49 
51 
52 
53 
55 
56 
56 
57 
58 
59 
59 
60 
61 
63 
64 
66 
67 


41 

43 
44 
44 
45 
45 
46 
47 
48 
50 
51 
52 
54 
55 
56 
57 
58 
59 
59 
61 
62 
62 
64 
65 
66 
68 
69 


43 

44 
45 
45 
46 
47 
48 
48 
50 
51 
53 
54 
55 
57 
58 
59 
60 
61 
61 
62 
63 
64 
65 
67 
68 
70 
71 


44 
45 
46 
47 


32}^ 


47 


33 


48 


33J^ 

34 


49 

"in 


35 


51 


36 


5? 


37 


54 


38 


55 


39 


57 


40 


58 


41 


60 


41^ 


61 


42 


61 


42^ 


6? 


43 

44 


63 
64 


44 Vi 


65 


45 

46 


66 
67 


47 


69 


48 


70 


49 

50 


72 
73 



Arranged, by H. L. Stortz, Philadelphia 

Cost of Sheet Lining, 1/s Basis, 45c per 100 Sheets, 

26"x38" 

COST SHOWN IN CENTS 



Size 


20 


22 I 24 


26 


26 i 


27 


28 


29 


30 


31 


31J 


32 


32J 


33 


34 


35 


36 


30 


27 
28 
29 
29 
30 
30 
30 
31 
32 
33 
34 
35 
36 
36 
37 
38 
38 
39 
39 
40 
40 
41 
42 
43 
44 
45 
46 


30 
31 
31 
32 
32 
33 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
42 
43 
43 
44 
45 
45 
46 
47 
48 
49 
50 


33 

34 
34 
35 
35 
36 
37 
37 
38 
39 
40 
41 
43 
44 
45 
45 
46 
46 
47 
48 
49 
49 
50 
51 
52 
53 
55 


36 

37 
37 
38 
38 
39 
40 
40 
41 
43 
44 
45 
46 
47 
49 
49 
50- 
50 
51 
52 
53 
53 
54 
56 
57 
58 
59 


36 

37 
38 
39 
39 
40 
40 
41 
42 
43 
44 
46 
47 
48 
49 
49 
50 
51 
52 
53 
53 
54 
56 
57 
58 
59 
60 


37 
38 
39 
39 
40 
41 
41 
42 
43 
44 
46 
47 
48 
49 
50 
51 
52 
52 
53 
54 
55 
55 
57 
58 
59 
60 
61 


38 
39 
40 
41 
41 
42 
43 
43 
45 
46 
47 
48 
50 
51 
52 
53 
54 
54 
55 
56 
57 
57 
59 
60 
61 
61 
64 


40 
41 
42 
42 
43 
43 
44 
45 
46 
48 
49 
50 
52 
53 
54 
55 
56 
56 
57 
58 
59 
60 
61 
62 
64 
65 
66 


41 
42 
43 
44 
44 
45 
46 
46 
48 
49 
51 
52 
53 
55 
56 
57 
57 
58 
59 
60 
61 
62 
63 
64 
66 
67 
68 


42 
44 
45 
45 
46 
47 
47 
48 
49 
51 
52 
54 
55 
57 
58 
59 
59 
60 
61 
62 
63 
64 
65 
66 
68 
69 
71 


43 
44 
45 
46 
47 
47 
48 
49 
50 
52 
53 
55 
56 
58 
59 
60 
60 
60 
62 
63 
63 
65 
66 
68 
69 
70 
72 


44 
45 
46 
47 
47 
48 
49 
50 
51 
53 
54 
55 
57 
58 
60 
61 
61 
62 
63 
65 
65 
66 
67 
69 
71 
72 
73 


44 
46 
47 
47 
48 
49 
50 
50 
52 
53 
55 
56 
58 
59 
61 
62 
62 
63 
64 
65 
66 
67 
68 
70 
71 
73 
74 


45 

47 
47 
48 
49 
50 
50 
51 
53 
54 
56 
57 
59 
60 
62 
62 
62 
64 
65 
66 
67 
68 
69 
71 
72 
74 
75 


46 
48 
49 
50 
50 
51 
52 
53 
54 
56 
57 
59 
60 
62 
64 
64 
65 
66 
67 
68 
69 
70 
71 
73 
74 
76 
78 


48 
49 
50 
51 
52 
53 
53 
54 
56 
57 
59 
61 
62 
64 
65 
66 
67 
68 
69 
70 
71 
72 
73 
75 
77 
78 
80 


49 


31 


51 


31 H 


5? 


32 


5? 


32^ 


53 


33 


54 


33 y 2 


"S5 


34 


56 


35 


57 


36 


59 


37 


61 


38 


6? 


39 


64 


40 


66 


41 


67 


41 J^ 


68 


42 


69 


42V£ 


70 


43 


71 


44 


7? 


44 Vi 


73 


45 


74 


46 


75 


47 


77 


48 


79 


49 


80 


50 


82 







Arranged by H. L. Stortz, Philadelphia 



Addenda 



281 



Cost of Sheet Lining, Is Basis, 50c per 100 Sheets, 

26" x 38" 

COST SHOWN IN CENTS 



Size 


20 


22 


24 


26 


26A 


27 


28 


29 


30 


31 


31i 1 32 


32 


33 


34 


35 


36 


30 


30 
31 
32 
32 
33 
33 
34 
34 
35 
36 
37 
38 
39 
40 
41 
42 
42 
53 
44 
45 
45 
46 
47 
48 
39 
50 
51 


33 
34 
35 
36 
36 
37 
37 
38 
39 
40 
41 
42 
43 
44 
46 
46 
47 
47 
48 
49 
49 
50 
51 
52 
53 
54 
55 


36 
38 
38 
39 
39 
40 
41 
41 
43 
44 
45 
46 
47 
49 
50 
50 
51 
52 
52 
53 
54 
55 
56 
57 
58 
59 
61 


39 
41 
41 
42 
43 
43 
43 
45 
46 
47 
49 
50 
51 
53 
54 
55 
55 
56 
57 
58 
59 
59 
61 
62 
63 
64 
66 


40 
41 
42 
43 
43 
44 
45 
46 
47 
48 
50 
51 
52 
54 
55 
56 
56 
57 
58 
59 
60 
60 
62 
63 
64 
66 
67 


41 
42 
43 
44 
44 
45 
46 
46 
48 
49 
51 
52 
53 
55 
56 
57 
57 
58 
59 
60 
61 
61 
63 
64 
66 
67 
68 


42 
44 
45 
45 
46 
47 
47 
48 
50 
51 
52 
54 
55 
57 
58 
59 
60 
60 
61 
62 
63 
64 
65 
67 
68 
70 
71 


44 

45 
46 
47 
48 
48 
49 
50 
51 
53 
54 
56 
57 
59 
60 
61 
62 
62 
63 
65 
65 
66 
68 
69 
70 
72 
74 


46 
47 
48 
49 
49 
50 
51 
52 
53 
55 
56 
58 
59 
61 
62 
63 
64 
65 
65 
67 
68 
69 
70 
72 
73 
75 
76 


47 
49 
49 
50 
51 
52 
53 
53 
55 
57 
58 
60 
61 
63 
64 
65 
66 
67 
67 
69 
70 
71 
72 
74 
76 
77 
79 


48 
49 
50 
51 
52 
53 
54 
55 
56 
57 
59 
61 
62 
63 
65 
66 
67 
68 
69 
70 
71 
72 
74 
75 
77 
78 
80 


49 
50 
51 
52 
53 
54 
54 
55 
57 
58 
60 
62 
63 
65 
66 
67 
68 
69 
70 
71 
72 
73 
75 
76 
78 
80 
81 


49 
51 
52 
53 
54 
54 
55 
56 
58 
59 
61 
63 
64 
66 
68 
68 
69 
70 
71 
72 
73 
74 
76 
78 
79 
81 
83 


50 
52 
53 
54 
54 
54 
56 
57 
58 
60 
62 
64 
65 
67 
69 
70 
70 
71 
72 
74 
76 
76 
77 
79 
81 
82 
84 


52 
53 
54 
55 
56 
57 
58 
59 
60 
62 
64 
66 
67 
69 
71 
72 
72 
73 
74 
76 
77 
77 
79 
81 
83 
85 
86 


53 
55 
56 
57 
58 
59 
59 
60 
62 
64 
66 
67 
69 
71 
73 
74 
75 
76 
76 
78 
79 
80 
82 
84 
85 
87 
89 


55 


31 


56 


31 Vi. 


58 


32 


58 


32 y 2 


59 


33 


60 


33J/£ 


61 


34 

35 


62 
64 


36 


66 


37 


68 


38 


69 


39 


71 


40 


73 


41 


75 


41 y 2 


76 


42 


77 


42^ 


78 


43 


79 


44 


80 


44 y 2 


81 


45 


82 


46 


84 


47 


86 


48 


88 


49 


90 


50 


91 







Arranged by H. L. Stortz, Philadelphia 

Cost of Sheet Lining, Is Basis, 60c per 100 Sheets, 

26" x 38" 

COST SHOWN IN CENTS 



Size 


| 20 


22 


24 


26 


26 J 


27 


28 


29 


30 


31 


Z\\ 


32 


32$ 


33 


34 


35 


36 


30 


..! 36 


40 


44 


47 


48 


49 


51 


53 


55 


56 


58 


58 


59 


60 


62 


64 


66 


31 


.. 38 


41 


45 


49 


50 


51 


53 


55 


56 


58 


60 


60 


61 


62 


64 


66 


68 


31 Vi 


..38 


42 


46 


50 


50 


52 


54 


55 


57 


59 


60 


61 


62 


63 


65 


67 


69 


32 


..39 


43 


47 


51 


51 


52 


54 


56 


58 


60 


61 


62 


63 


64 


66 


68 


70 


32H 


..; 39 


43 


47 


51 


52 


53 


55 


57 


59 


61 


62 


63 


64 


65 


67 


69 


71 


33 


..1 40 


44 


48 


52 


53 


54 


56 


58 


60 


62 


64 


64 


65 


66 


68 


70 


72 


33^ 


..! 41 


45 


49 


53 


53 


55 


57 


59 


61 


63 


64 


65 


66 


67 


69 


71 


73 


34 


..41 


45 


50 


54 


55 


56 


58 


60 


62 


64 


66 


66 


67 


68 


70 


72 


74 


35 


..43 


47 


51 


55 


56 


57 


60 


62 


64 


66 


68 


68 


69 


70 


72 


74 


77 


36 


. . 44 


48 


52 


57 


58 


59 


61 


63 


66 


68 


70 


70 


71 


72 


74 


77 


79 


37 


..l 45 


49 


54 


58 


60 


60 


63 


65 


67 


70 


72 


72 


73 


74 


76 


79 


80 


38 


... 46 


50 


55 


60 


61 


62 


65 


67 


69 


72 


74 


74 


75 


76 


78 


80 


83 


39 


..47 


52 


57 


62 


63 


64 


66 


69 


71 


73 


75 


76 


77 


78 


81 


83 


85 


40 


.. 49 


53 


58 


63 


64 


66 


68 


71 


73 


75 


78 


78 


79 


80 


83 


85 


87 


41 


.. 50 


55 


60 


65 


66 


67 


70 


72 


75 


77 


80 


80 


81 


82 


85 


87 


90 


41 H 


..50 


55 


60 


66 


67 


68 


70 


73 


75 


78 


81 


81 


82 


83 


86 


88 


91 


42 


..1 51 


56 


61 


66 


68 


69 


71 


74 


77 


79 


82 


82 


83 


84 


87 


88 


92 


42^ 


..1 52 


57 


62 


67 


68 


70 


72 


75 


77 


80 


83 


83 


84 


85 


88 


90 


93 


43 


..! 52 


57 


63 


68 


69 


71 


73 


76 


78 


81 


84 


84 


85 


86 


89 


91 


94 


44 


.. 53 


59 


64 


69 


71 


72 


75 


78 


80 


83 


86 


86 


87 


88 


91 


94 


96 


44^ 


. . 54 


59 


66 


70 


72 


73 


76 


78 


81 


84 


86 


86 


88 


89 


92 


95 


97 


45 


..i 55 


60 


66 


71 


72 


74 


77 


79 


82 


85 


88 


88 


89 


90 


93 


96 


98 


46 


. . 56 


61 


67 


73 


74 


75 


78 


81 


84 


87 


90 


90 


90 


92 


95 


98 


101 


47 


..I 57 


63 


69 


74 


76 


77 


80 


83 


86 


89 


92 


92 


93 


94 


97 


100 


103 


48 


. . I 58 


64 


70 


76 


77 


79 


82 


85 


87 


91 


94 


94 


95 


96 


99 


102 


105 


49 


. .1 60 


65 


71 


77 


79 


80 


83 


86 


89 


92 


94 


95 


97 


98 


101 


104 


107 


50 


60 


67 


73 


79 


80 


82 


85 


88 


91 


94 


96 


97 


99 


100 


103 


106 


109 



Arranged by II, L. Stortz, Philadelphia 



282 Manual of Cost Engineering and Estimating 



Cost of Sheet Lining, 1/s Basis, 65c per 100 Sheets, 

26" x 38" 











COST SHOWN IN 


CENTS 
















Size 


20 


22 


24 


26 


26J 


27 


28 


29 


30 


31 


31i 


32 


32i 


33 


34 


35 


36 


30 


39 
41 
41 
42 
43 
43 
44 
45 
46 
47 
49 
50 
51 
53 
54 
55 
55 
56 
57 
58 
59 
59 
61 
62 
63 
64 
66 


43 
45 
46 
46 
47 
48 
48 
49 
51 
52 
54 
55 
56 
58 
59 
60 
61 
61 
62 
64 
64 
65 
66 
68 
70 
71 
72 


47 
49 
50 
51 
51 
52 
53 
54 
55 
57 
58 
60 
62 
63 
65 
65 
66 
67 
68 
69 
70 
71 
73 
74 
76 
77 
79 


51 
53 
54 
55 
56 
56 
57 
58 
60 
62 
63 
65 
67 
68 
70 
71 
72 
73 
74 
75 
76 
77 
79 
80 
82 
84 
85 


52 
54 
55 
56 
57 
58 
58 
59 
61 
63 
65 
66 
68 
70 
71 
72 
73 
74 
75 
77 
78 
79 
80 
82 
84 
85 
87 


53 

55 
56 
57 
58 
59 
59 
60 
62 
64 
66 
67 
69 
71 
73 
74 
75 
75 
76 
78 
79 
80 
82 
83 
85 
87 
89 


55 

57 
58 
59 
60 
61 
62 
63 
64 
66 
68 
70 
72 
74 
75 
76 
77 
78 
79 
81 
82 
83 
85 
87 
88 
90 
92 


57 
59 
60 
61 
62 
63 
64 
65 
67 
69 
71 
72 
74 
76 
78 
79 
80 
81 
82 
84 
85 
86 
88 
90 
92 
94 
95 


59 
61 
62 
63 
64 
65 
66 
67 
69 
71 
73 
75 
77 
79 
81 
82 
83 
84 
85 
87 
88 
89 
91 
93 
95 
97 
99 


61 
63 
64 
65 
66 
67 
68 
69 
71 
73 
75 
78 
80 
82 
84 
85 
86 
87 
88 
90 
91 
92 
94 
96 
98 
100 
102 


62 

64 
65 
66 
67 
68 
70 
71 
73 
75 
77 
79 
81 
83 
85 
86 
87 
88 
89 
91 
92 
93 
95 
98 
100 
102 
104 


63 

65 
66 
67 
69 
70 
71 
72 
74 
76 
78 
80 
82 
84 
87 
88 
89 
90 
91 
93 
94 
95 
97 
99 
101 
103 
105 


64 
66 
68 
69 
70 
71 
72 
73 
75 
77 
79 
81 
84 
86 
88 
89 
90 
91 
92 
95 
96 
97 
99 
101 
103 
105 
107 


65 

67 
68 
70 
71 
72 
73 
74 
76 
78 
80 
83 
85 
87 
89 
90 
91 
92 
94 
96 
97 
98 
100 
102 
105 
107 
109 


67 

69 

71 

72 

73 

74 

75 

76 

78 

81 

83 

85 

87 

90 

92 

93 

94 

95 

96 

99 

100 

101 

103 

105 

108 

110 

112 


69 

71 

73 

74 

75 

76 

77 

78 

81 

83 

85 

88 

90 

92 

95 

96 

97 

98 

99 

101 

103 

104 

106 

108 

111 

113 

115 


71 


31 


73 


siy 2 


75 


32 


76 


32^ 


77 


33 


78 


33 y 2 


79 


34 


80 


35 


83 


36 


85 


37 


88 


38 


90 


39 


92 


40 


95 


41 


97 


41}^ 


98 


42 


99 


42^ 


101 


43 


102 


44 


104 


44 y 2 


105 


45 


107 


46 


109 


47 


111 


48 


114 


49 

50 


116 
118 







Arranged by H. L. Stortz, Philadelphia 

Cost of Sheet Lining, 1/s Basis, 70c per 100 Sheets, 

26" x 38" 

COST SHOWN IN CENTS 



Size 


20 


22 


24 


26 | 26J 


27 


28 


29 


30 


31 


31J 


32 


32J 


33 


34 


35 


36 


30] 


42 
44 
45 
45 
46 
47 
47 
48 
50 
51 
52 
54 
55 
57 
58 
59 
60 
60 
61 
62 
63 
64 
65 
67 
68 
70 
71 


47 
48 
49 
50 
51 
51 
52 
53 
54 
56 
58 
59 
61 
62 
64 
65 
65 
66 
67 
69 
69 
70 
72 
73 
75 
76 
78 


51 
53 
54 
54 
55 
56 
57 
58 
59 
61 
63 
65 
66 
68 
70 
71 
71 
72 
73 
75 
76 
77 
78 
80 
82 
83 
85 


55 

57 
58 
59 
60 
61 
62 
63 
64 
66 
68 
70 
72 
74 
75 
76 
77 
78 
79 
'81 
82 
83 
85 
87 
88 
90 
92 


56 

58 
59 
60 
61 
62 
63 
64 
66 
68 
70 
71 
73 
75 
77 
78 
79 
80 
81 
83 
84 
85 
86 
88 
90 
92 
94 


57 
59 
60 
61 
62 
63 
64 
65 
67 
69 
71 
73 
75 
76 
78 
79 
80 
81 
82 
84 
85 
86 
88 
90 
92 
94 
96 


59 
61 
62 
63 
64 
65 
66 
67 
69 
71 
73 
75 
77 
79 
81 
82 
83 
84 
85 
87 
88 
89 
91 
93 
95 
97 
99 


62 
64 
6.5 
66 
67 
68 
69 
70 
72 
74 
76 
78 
80 
82 
84 
85 
86 
87 
88 
90 
91 
92 
95 
97 
99 
101 
103 


64 

66 
67 
68 
69 
70 
71 
72 
74 
77 
79 
81 
83 
85 
87 
88 
89 
90 
92 
94 
95 
96 
98 
100 
102 
104 
106 


66 
68 
69 
70 
71 
73 
74 
75 
77 
79 
81 
84 
86 
88 
90 
91 
92 
93 
95 
97 
98 
99 
101 
103 
106 
108 
110 


67 

69 

70 

72 

73 

74 

75 

76 

78 

80 

83 

85 

87 

90 

92 

93 

94 

95 

96 

98 

99 

101 

103 

105 

107 

109 

112 


68 

70 

71 

73 

74 

75 

76 

77 

80 

82 

84 

86 

89 

91 

93 

94 

95 

97 

98 

100 

101 

102 

105 

107 

109 

111 

114 


69 

72 

73 

74 

75 

76 

77 

78 

81 

83 

85 

88 

90 

92 

95 

96 

97 

98 

99 

102 

103 

104 

106 

109 

111 

113 

115 


70 
73 

74 

75 

76 

77 

79 

80 

82 

84 

86 

89 

91 

93 

96 

97 

98 

100 

101 

103 

104 

106 

108 

110 

113 

115 

117 


72 

75 

76 

77 

78 

80 

81 

82 

84 

87 

89 

92 

94 

96 

99 

100 

101 

103 

104 

106 

107 

109 

111 

113 

116 

118 

121 


74 

77 

78 

80 

81 

82 

83 

84 

87 

89 

92 

94 

97 

99 

102 

103 

104 

105 

106 

109 

110 

112 

114 

117 

119 

122 

124 


77 


311 

31^ 


79 
80 


32 

32}4 


82 
83 


33 


84 


33 \h 


85 


34 


87 


35 


89 


36 


92 


37 


95 


38 


97 


39 


99 


40 


102 


41 


105 


41 H 

42 


106 
107 


42}^ 


108 


43 


109 


44 


112 


44>i 


114 


45 


115 


46 


117 


47 


119 


48 

49 

50 


123 
125 
128 







Arranged by H. L. Stortz, Philadelphia 



Addenda 



283 



Cost of Sheet Lining, Is Basis, 75c per 100 Sheets, 

26" x 38" 

COST SHOWN IN CENTS 



Size 


20 


22 


24 


26 


26 J 


27 


28 


29 


30 


31 


31£ 


32 


32| 


33 


34 


35 


36 


30 

31 

3iy 2 

32 


45 
47 
48 
49 
49 
50 
51 
52 
53 
55 
56 
58 
59 
61 
62 
63 
64 
65 
65 
67 
68 
68 
70 
71 
73 
74 
76 


50 
52 
53 
53 
54 
55 
56 
57 
58 
60 
62 
63 
65 
67 
67 
69 
70 
71 
72 
74 
74 
75 
77 
78 
80 
82 
83 


55 
56 
57 
58 
59 
60 
61 
62 
64 
66 
67 
69 
71 
73 
75 
76 
77 
77 
78 
80 
81 
82 
84 
85 
87 
89 
91 


59 
61 
62 
63 
64 
65 
66 
67 
69 
71 
73 
75 
77 
79 
81 
82 
83 
84 
85 
87 
88 
89 
91 
93 
94 
97 
99 


60 
62 
63 
64 
65 
66 
67 
68 
70 
72 
74 
75 
78 
80 
82 
83 
84 
85 
86 
89 
90 
91 
93 
95 
97 
99 
101 


61 
63 
65 
66 
67 
68 
69 
70 
72 
74 
76 
78 
80 
82 
84 
85 
86 
87 
88 
90 
91 
92 
94 
96 
98 
101 
103 


64 
66 
67 
68 
69 
70 
71 
72 
74 
76 
79 
81 
83 
85 
87 
88 
89 
90 
91 
94 
95 
96 
98 
100 
102 
104 
106 


66 
68 
69 
70 
71 
72 
74 
75 
77 
79 
81 
83 
85 
87 
90 
91 
92 
93 
95 
97 
98 
99 
101 
103 
105 
108 
109 


68 
71 
72 
73 
74 
75 
76 
77 
80 
82 
84 
86 
89 
91 
93 
95 
96 
97 
98 
100 
101 
102 
105 
107 
109 
112 
114 


71 
73 
74 
75 
77 
78 
79 
80 
82 
85 
87 
89 
92 
94 
96 
98 
99 
100 
101 
104 
105 
106 
108 
111 
113 
115 
118 


72 
74 
75 
77 
78 
79 
80 
81 
84 
86 
89 
91 
93 
96 
98 
99 
100 
100 
103 
105 
106 
108 
110 
112 
115 
117 
120 


73 
75 
77 
78 
79 
80 
82 
83 
85 
88 
90 
92 
95 
97 
100 
101 
102 
103 
104 
107 
108 
109 
112 
114 
117 
119 
122 


74 
77 
78 
79 
80 
82 
83 
84 
86 
89 
92 
94 
96 
99 
101 
103 
104 
105 
106 
109 
110 
111 
114 
116 
118 
121 
124 


75 

78 
79 
80 
82 
83 
84 
85 
88 
90 


77 
80 
81 
83 
84 
85 
87 
88 
90 
93 


80 
82 
84 
85 
86 
88 
89 
90 
93 


82 
85 
86 

87 


32^ 

33 


89 
90 


33 Yi 


9?, 


34 


93 


35 


95 


36 


96 | 98 


37 


93 ! 96 


98 101 


38 


95 98 101 |104 


39 


98 101 103 106 


40 


100 103 106 109 


41 


103 1106 ,109 :112 


41 Vi 


104 ,107 110 1113 


42 


105 109 1112 


115 


42^ 


107 
108 
110 
112 
113 
115 
118 
120 
123 
125 


110 113 

111 114 

114 117 

115 |ll8 


116 


43 


118 


44 


130 


44^6 


m 


45 


116 119 1123 


46 


119 
121 
124 
126 
128 


m 


126 


47 


125 
128 
130 
133 


128 


48 


131 


49 

50 


134 
136 







Arranged by H. L. Stortz, Philadelphia 

Cost of Sheet Lining, Is Basis, $1.25 per 100 Sheets, 

26" x 38" 

COST SHOWN IN CENTS 



Size 



20 22 24 26 26} 27 28 29 30 31 31J 32 32J 33 34 35 36 



30 
31 

3iy 2 

32 

32 M 

33 

33^ 

34 

35 

36 

37 

38 

39 

40 

41 

41 Vi 

42 

42^ 

43 

44 

44 Vi 

45 

46 

47 

48 

49 

50 



8-4 
86 

88 

so 

90 

92 

93 

95 

97 
100 
103 
IOC 
109 
111 
114 
116 
117 
US 
119 
122 
124 
125 
128 
131 |143 
134 146 
136 1 149 
139 1152 



145 i 148 
146 ' 149 
148 151 
152 154 
155 158 
158 161 
161 1164 
165 168 



106 

iog 

in 

113 
115 
117 
119 
120 
124 
12S 
131 
134 
138 
142 
145 
147 
149 
150 
152 



128; 129 
129 S132 
132 1134 



150 1156 
152 158 
154 159 
157 163 
161 166 
164 170 
168 174 
171 177 



154 159 
156 161 
158 163 

162 167 

163 169 
165 171 
169 175 
172 179 
176 [182 
180 '186 
184 '189 



149 152 
153 156 
157 ! 159 
161 1 163 
163 1 165 
165 1 167 



107 
169 

173 
175 
177 
1S1 
185 
189 
193 
197 



179 183 
184 1186 
188 191 
192,194 
196 199 
199 203 



129 133 
133 137 
136 139 

138 142 

139 144 
142 146 
144 148 
146 ]151 
151 1155 



198 1 204 
203 209 
207 1213 

211 217 
216 222 



137 
141 
143 
146 
148 
150 
153 
155 
159 
164 
169 
173 
178 
182 
187 
189 
192 
194 
196 
201 
203 
205 
209 
214 
219 
224 
228 



Arranged by H. L. Stortz, Philadelphia 



284 Manual of Cost Engineering and Estimating 



Cost of Sheet Lining, 1/s Basis, $1.75 per 100 Sheets, 

26" x 38" 



COST SHOWN IN CENTS 



Size 


20 


22 


24 


26 


26J 


27 


28 


29 


30 


31 


31| 


32 


325 


33 


34 


35 


36 


30 


106 
109 
111 
113 
115 
117 
119 
120 
124 
127 
131 
134 
138 
142 
145 
147 
149 
150 
152 
156 
158 
159 
163 
167 
169 
174 
177 


117 
121 
123 
125 
127 
129 
130 
132 
136 
139 
144 
148 
152 
156 
159 
162 
163 
165 
167 
171 
173 
175 
179 
183 
187 
191 
195 


127 
132 
134 
136 
138 
140 
142 
144 
148 
153 
157 
162 
166 
169 
174 
176 
179 
180 
183 
187 
189 
191 
195 
199 
204 
208 
212 


138 
143 
145 
147 
149 
152 
154 
156 
161 
166 
170 
175 
179 
184 
189 
191 
193 
196 
199 
203 
205 
207 
212 
216 
221 
226 
230 


141 
145 
148 
150 
153 
155 
157 
159 
164 
169 
174 
178 
183 
188 
193 
195 
197 
199 
202 
206 
209 
211 
216 
221 
226 
229 
235 


143 
148 
150 
153 
155 
158 
160 
162 
167 
172 
177 
182 
187 
192 
196 
199 
201 
203 
206 
210 
213 
215 
219 
225 
229 
234 
239 


148 
153 
156 
158 
161 
163 
166 
168 
173 
178 
183 
188 
193 
198 
203 
205 
208 
211 
213 
218 
221 
223 
228 
233 
238 
243 
248 


154 
159 
162 
164 
167 
169 
172 
175 
179 
185 
189 
195 
200 
205 
210 
213 
216 
218 
220 
226 
229 
231 
236 
240 
246 
251 
256 


159 
164 
167 
169 
173 
175 
178 
180 
186 
191 
197 
202 
207 
213 
218 
220 
223 
226 
229 
234 
236 
239 
245 
249 
255 
259 
266 


165 
169 
173 
176 
179 
181 
184 
187 
192 
198 
203 
209 
214 
219 
225 
228 
231 
234 
236 
242 
245 
247 
253 
258 
264 
269 
274 


168 
173 
176 
179 
182 
184 
187 
189 
195 
201 
206 
212 
218 
223 
229 
232 
234 
237 
240 
246 
249 
252 
257 
262 
268 
274 
279 


170 
176 
179 
182 
184 
187 
189 
193 
198 
204 
209 
216 
221 
227 
232 
236 
238 
242 
244 
249 
252 
255 
261 
266 
272 
278 
283 


173 
179 
182 
184 
187 
190 
193 
196 
202 
207 
213 
219 
225 
231 
236 
239 
242 
245 
248 
253 
256 
259 
265 
270 
276 
282 
288 


175 
181 
184 
187 
190 
193 
196 
199 
205 
210 
216 
222 
228 
234 
239 
243 
246 
249 
252 
257 
260 
263 
269 
275 
280 
287 
293 


180 
187 
189 
193 
196 
199 
202 
205 
211 
217 
223 
229 
235 
241 
247 
249 
253 
256 
259 
265 
268 
271 
277 
283 
289 
295 
301 


186 
192 
195 
198 
202 
205 
208 
211 
217 
223 
229 
235 
242 
248 
254 
257 
260 
263 
267 
273 
276 
279 
285 
291 
297 
304 
309 


191 


31 


197 


31}^ 


201 


32 


?04 


32^ 


?07 


33 


?10 


33 Y 2 


''IS 


34 


*>16 


35 


99^ 


36 


??9 


37 


?36 


38 


94? 


39 ... 


?49 


40 


?•>•> 


41 


?61 


41 Yi 


flfi5 


42 


?68 


42^£ 


971 


43 


?74 


44 


?80 


44J3 


?83 


45 


m 


46 


W3 


47 


?99 


48 


306 


49 


313 


50 


318 







Arranged by H. L. Stortz, Philadelphia 



Addenda 



285 



Paper Tables 

TABLE OF EQUIVALENT WEIGHTS. BASIS 25"x38' 



20x24 


20.1 


25.2 


30.4 


35.3 


40.4 


46.5 


50.5 


60.7 


20x25 


21 


26.3 


31.6 


36.8 


42.1 


47.4 


52.6 


63.2 


20x26 


21.9 


27.4 


32.8 


38.3 


43.8 


49.3 


54.7 


65.7 


20x28 


23.6 


29.5 


35.4 


41.3 


47.2 


53.1 


58.9 


70.7 


20x30 


25.3 


31.6 


37.9 


44.2 


50.5 


56.8 


63.2 


75.8 


20x31 


26.1 


32.6 


39.2 


45.7 


52.2 


58.7 


65.3 


78.3 


22x24 


22.2 


27.8 


33.5 


39 


44.5 


50 


55.7 


66.8 


22x28 


25.9 


32.4 


38.8 


45.3 


51.8 


58.3 


64.7 


77.7 


24x30 


30.3 


37.9 


45.5 


53.1 


60.6 


68.2 


75.8 


90.9 


24x36 


36.4 


45.5 


54.6 


63.7 


72.8 


81.9 


91.1 


109.3 


25x38 


40 


50 


60 


70 


80 


90 


100 


120 


26x38 


41.6 


52 


62.3 


72.7 


83 


93.5 


104 


125 


30x40 


50.5 


63.2 


75.8 


88.4 


101.1 


113.7 


126.3 


151.6 



Arranged by H. L. Stortz, Philadelphia 



286 Manual of Cost Engineering and Estimating 







SCALE OF WEIGHTS EQUAL TO 24 X 36 








24 X 


36 


15 


20 


25 


30 


35 


40 


50 


60 


70 


80 


90 


100 


125 


150 


12 X 


18 


4 


5 


6 


8 


9 


10 


13 


15 


18 


20 


23 


25 


31 


38 


15 X 


20 


5 


7 


9 


11. 


12 


14 


18 


21 


24 


28 


31 


35 


44 


52 


18 X 


24 


8 


1C 


13 


15 


18 


20 


25 


30 


35 


40 


45 


50 


63 


75 


20 X 


30 


11 


14 


18 


21 


25 


28 


35 


42 


49 


56 


63 


70 


87 


105 


22 X 


32 


12 


16 


20 


25 


29 


33 


40 


50 


57 


65 


74 


80 


102 


120 


26 X 


36 


16 


22 


27 


33 


38 


44 


54 


65 


76 


87 


98 


109 


136 


163 


30 X 


40 


21 


28 


35 


42 


49 


56 


70 


84 


97 


112 


125 


140 


174 


209 


36 X 


40 


25 


34 


42 


50 


59 


67 


84 


100 


117 


134 


150 


167 


209 


250 


40 X 


48 


34 


45 


56 


67 


78 


90 


112 


133 


156 


180 


200 


224 


278 


336 


48 X 


52 


44 


58 


72 


87 


101 


116 


144 


174 


202 


232 


261 


288 


360 


432 


48 X 


64 


54 


71 


89 


107 


125 


142 


178 


214 


250 


284 


321 


356 


445 


534 



Arranged by H. L. Stortz, Philadelphia. 



For other sizes the estimator is referred to "CarnelFs Ready 
Reckoning" for book, news and cover papers, published by Am- 
brose S. Carnell, 150 Nassau St., New York City. 

Also for Paper and Board Equivalents, the estimator will 
find the Paper Equivalentor, marketed by Ralph Landenberger, 
175 W. Jackson Blvd., Chicago, a very handy circular sliding 
rule which will give all equivalents on board} and paper by an 
easy method. Partial description: 

The Paper Equivalentor is, as its name suggests, an instru- 
ment for finding equivalents. 

It will instantly and accurately find: 

1. The equivalent weight per ream in any possible size sheet. 

2. The equivalent price per 100 sheets of card-board in any 
possible size sheet. 

3. The equivalent number of sheets to a bundle of box-board 
or straw-board in any possible size sheet. 

4. The proportionate size of any cut or drawing for reduc- 
tion or enlargement. 

In three slight movements. 

Even if your size should include fractions of an inch, such 
as 29%x47%, its equivalent can be as readily found as any 
stock size. 

Exact Equivalent of Stock Sizes: It is useful also in deter- 
mining the exact equivalent in stock sizes, as compared to the 



Addenda 287 

approximate equivalent usually found in tables of comparative 
weight, for instance: Taking as a basis 17x22 — 20, the equiva- 
lent weight in double double cap, 28 x 34, is usually considered 
as 48, while the actual equivalent, as shown by the Paper Equiva- 
lentor, is 28x34—51. 

Cardboard Equivalents: The same method exactly is used 
for finding card-board equivalents. If 100 sheets of 22 x 28 cost 
$2.45, the cost in 42% x 45 or any possible size is found in three 
slight movements. 

For the Paper Box Manufacturer or anyone who handles box- 
board or straw-board, the problem of how many sheets to a 
bundle of 50 pounds in, for instance, 34%x43, or any other 
size, using as a basis the usual 26 x 38 or any other basis, is 
found with the Paper Equivalentor in three slight movements. 

Multiplies and Divides: It multiplies with one operation, 
for instance, 49 Yi x 3%. Divides with equal facility. Better 
than an ordinary slide rule for this, because of more numbered 
divisions. Nothing left to calculate. Useful in finding the unit 
rate of costs. 

For Proportions: For the Printer, Lithographer or Photo- 
Engraver who has a drawing, say 5x8 inches, and wishing to 
know what the height would be if width were reduced to 3% 
inches, or vice-versa, has only to pick up the Paper Equivalentor 
and find the answer in three slight movements. 

And, what is perhaps the most noteworthy point of all, the 
range is from 1 to 100 inches. 

Slide Rules and Tables 

There are a number of Slide Tables offered to the Industry 
giving in convenient form the cost per 100 sheets of box-board 
cost of paper and equivalents. These can be used to advantage 
and among others we mention: Sliding table offered by Samuel 
Langston, Camden, N. J.; Hobbs Mfg. Co., Worcester, Mass.; 
American Writing Paper Co., Holyoke, Mass. 

The Slide Rule 

The instrument which is used for calculations by the En- 
gineering Profession and which can be purchased from any 
dealer in engineering supplies will be found to be an invaluable 
assistance to the estimator, the use, however, of this rule with 
facility must be acquired by study. It is mentioned here so that 
attention may be called to all methods or instruments to assist 
the estimator in his work. 



288 Manual of Cost Engineering and Estimating 

Quick Rule for Ascertaining Number of Sheets to 1000 
Boxes, Cut from Paper Size of Sheets as Given 

This rule assumes that paper is all used and no offals are 
considered, the basis being the same as if figured by square 
inches. 

This ingenious rule arranged by Walter Trumm, Brooklyn, 
N. Y., can be obtained in convenient ruler form for desk use of 
Walther & Co., 72 Duane St., New York City. 

26x20 25x20 24x20 



One dimension of box multiplied by 
figure on table opposite other dimen- 
sion 24x20 
will give number of sheets either 25x20 

26x20 
required per M boxes. 

Example : 

Box 10 x 6 — 3 in. high. Cover 1 in. 
10 x 6 (2 sides) = 32" around 

+ 2" lap = 34". 
3 + 1=4" high + 2" turn in 
= 6". 
34" X 6" 

number opposite 6" on table is 
12.48 for sheets 24 x 20 X other di- 
mensions 34 

424 sheets 424 
Top label 10 x 6 
Number opposite 6" 12.48 
X other dimension 10. 



1" 


1.92 


2.00 


2.08 


1% 


2.40 


2.50 


2.60 


1% 


2.88 


3.00 


3.12 


1% 


3.36 


3.50 


3.64 


2 


3.84 


4.00 


4.16 


2% 


432 


4.50 


4.68 


2% 


4.80 


5.00 


5.20 


2% 


5.28 


5.50 


5.72 


3 


5.76 


6.00 


6.24 


3% 


6.24 


6.50 


6.76 


3% 


6.72 


7.00 


7.28 


3% 


7.20 


7.50 


7.80 


4 


7.68 


8.00 


8.32 


4% 


8.16 


8.50 


8.84 


4% 


8.64 


9.00 


9.36 


4% 


9.12 


9.50 


9.88 


5 


9.60 


10.00 


10.40 


5y 4 


10.08 


10.50 


10.92 


5% 


10.56 


11.00 


11.44 


5% 


11.44 


11.50 


11.96 


6 


11.52 


12.00 


12.48 


6% 


1200 


12.50 


13.00 


6% 


12.48 


13.00 


13.52 


6% 


12.96 


13.50 


14.04 


7 


13.44 


14.00 


14.56 


7% 


13.92 


14.50 


15.08 


7y 2 


14.40 


15.00 


15.60 


7% 


14.88 


15.50 


16.12 


8 


15.36 


16.00 


16.64 


8% 


1584 


16.50 


17.16 


8% 


16.22 


17.00 


17.68 


8% 


16.80 


17.50 


18.20 


9 


17.28 


18.00 


18.72 


9% 


17.76 


18.50 


19.24 


9% 


18.24 


19.00 


19.76 


9% 


18.72 


19.50 


20.28 


10 


19.20 


20.00 


20.80 



125 sheets 125 

549 sheets 

24x20 per 

1000 boxes 

For wrap work use same method as 

for top label. 



Addenda 



289 



Strip Paper Table 



MAXIMUM NUMBER OF RUNNING INCHES THAT CAN BE CUT 

FROM SHEET— WIDTH A" TO 6", ALSO SHOWING WIDTH 

OF OFFAL ON LEFTOVER STRIP 





20x24 


20x24 


20x25 


20x26 


20x28 


20x30 


1 20x31 




Width 


i Width 


Width 


Width 


Width 


Width 


Width 




of Roll 


| of Roll 


of Roll 


of Roll 


of Roll 


of Roll 


of Roll 




20" 


24" 


25" 


26" 


28" 


30" 


31" 


M 


960 





960 





1000 





1040 





1120 





1200 





1240 





A 


768 





768 





800 





820 


A 


880 


A. 


960 





980 


A 


U 


624 





640 





660 


X 


680 


A 


740 


X 


800 





820 


X 


A 


528 


X 


540 


A 


560 


A 


580 


A 


640 





680 


X 


700 


A 


1 


480 





480 





500 


o 


520 





560 





600 





620 





m 


408 


H 


420 


A 


440 


X 


460 


A 


480 


1 


520 


X 


540 


A 


IX 


384 





380 


A 


400 


o 1 


400 


l 


440 


A. 


480 





480 


l 


1H 


336 


3 A 


340 


A 


360 


A 


360 


IX 


1 400 


Xl 


420 


A 


480 


iA 


iA 


312 


A 


320 





320 


l 


340 


A 


360 


i 


400 





400 


l 


m 


288 


A 


280 


iX 


300 


A 


320 





340 


A 


360 


X 


380 


A 


i% 


264 


X 


260 


IX 


280 


A 


280 


\A 


320 





340 


X 


340 


IX 


m 


240 


1M 


240 


lA 


260 


y< 


260 


\A 


280 


iA 


320 





320 


l 


2 


240 





240 





240 





260 





280 





300 





300 


l 


iA 


216 


% 


220 


A 


220 


iA, 


240 


A 


260 


A 


280 


X 


280 


iX 


iX 


192 


2 


200 


iA 


220 


X: 


220 


IX 


240 


l 


260 


X 


260 


iX 


iA 


192 


1 


200 


iX 


200 


IX 


200 


iX 


220 


A 


240 


iA 


260 


A 


iA 


192 





180 


\A 


200 





200 


l 


220 


A 


240 





240 


l 


iA 


168 


\a 


180 


A 


180 


1^1 


180 


iA 


200 


\A 


220 


iA 


220 


iA 


iX 


168 


x 


160 


2 


180 


X\ 


180 


IX 


200 


A. 


200 


\A 


220 


X 


iA 


144 


lA 


160 


1 


160 


2 


180 


A 


180 


iA 


200 


IX 


200 


iX 


3 


144 





160 





160 


1 


160 


2 


180 


l 


200 





200 


l 


m 


144 


m 


140 


iA 


160 





160 


1 


160 


3 


180 


\A 


180 


iA 


3H 


144 


IX 


140 


iX 


140 


\A\ 


160 





160 


2 


180 


X 


180 


iX 


SVs 


120 


A 


140 


A 


140 


iA 


140 


iA 


160 


1 


160 


3 


180 


A 


sy 2 


120 


m 


120 


3 


140 


A\ 


140 


iA 


160 





160 


2 


160 


3 


sy 8 


120 


SX 


120 


2M 


120 


SX\ 


140 


A 


140 


iA 


160 


1 


160 


2 


3% 


120 


lA 


120 


IA 


120 


%A 


120 


3A 


140 


iX 


160 





160 


1 


sy$ 


120 


X 


120 


A 


120 


m\ 


120 


iX 


140 


A 


140 


iA 


160 





4 


120 





120 





120 


i 


120 


2 


140 





140 


2 


140 


3 


*A 


96 


3^8 


100 


3A 


120 


A 


120 


iA 


120 


SX 


140 


iA 


140 


iA 


\A 


96 


3 


100 


iA 


100 


m 


120 


A 


120 


iA 


140 


X 


140 


IX 


*A 


96 


iA 


100 


iA 


100 


3A\ 


100 


±A 


120 


IX 


120 


m 


140 


A 


&A 


96 


2 


100 


iA 


100 


iA 


100 


VA 


120 


l 


120 


3 


120 


4 


m 


96 


\A 


100 


A 


100 


IA: 


100 


iA 


120 


X 


120 


iX 


120 


3X 


*X 


96 


l 


100 


X 


100 


m 


100 


iX 


100 


*X 


120 


iA 


120 


iA 


m 


96 


A 


80 


m 


100 


A, 


100 


\A 


100 


SA 


120 


X 


120 


IX 


5 


96 





80 


4 


100 


o 1 


100 


l 


100 


3 


120 





120 


l 


5A 


72 


*A 


80 


3A 


80 


4M 


100 


A 


100 


iA 


100 


m 


120 


X 


5A 


72 


4M 


80 


3 


80 


4 ! 


80 


5 


100 


iX 


100 


3X 


100 


4% 


sy s 


72 


3K 


80 


iA 


80 


ZA 


80 


4H 


100 


\A 


100 


SA 


100 


m 


5y 2 


72 


*A 


80 


2 


80 


3 


80 


4 


100 


A 


100 


iA 


100 


3A 


5 5 A 


72 


SA 


80 


iA 


80 


zA 1 


80 


3^ 


80 


5A 


100 


iA 


100 


iA 


5% 


72 


iX 


80 


l 


80 


2 


80 


3 


80 


5 


100 


IX 


100 


iX 


5% 


72 


iA 


80 


A 


80 


iA\ 


80 


iA. 


80 


4A 


100 


A 


100 


\A 


6 


72 


2 


80 





80 


1 


80 


2 


80 


4 


100 





100 


l 



Arranged by H. L. Stortz, Philadelphia 



290 Manual of Cost Engineering and Estimating 

Paper Table, 500 Sheets to Ream 

SHOWING COST PER 100 SHEETS 20"x24" TO 30"x40" 



Price 
per R. 

20x24 




20x24 


20x26 


24x30 


26x30 


24x36 


25x38 


26x38 


30x40 


$1.00 


Per Ream . . 
100 Sheets . . 


$1.00 
.20 


$1.08 

.22 


$1.50 
.30 


$1.63 
.33 


$1.80 
.36 


$1.98 
.40 


$2.06 
.41 


$2.50 
.50 


1.25 


Ream .... 
100 Sheets . . 


1.25 
.25 


1.35 

.27 


1.88 
.38 


2.03 
.41 


2.25 
.45 


2.47 
.49 


2.57 
.51 


3.13 
.63 


1.50 


Ream . . . . 
100 Sheets . . 


1.50 
.30 


1.62 
.32 


2.25 
.45 


2.44 
.49 


2.70 
.54 


2.97 
.59 


3.09 
.62 


3.75 
.75 


1.75 


Ream . . . . 
100 Sheets . . 


1.75 
.35 


1.90 
.38 


2.63 
.53 


2.84 
.57 


3.15 
.63 


3.46 
.69 


3.60 

.72 


4.38 
.88 


2.00 


Ream . . . . 
100 Sheets . . 


2.00 
.40 


2.17 
.43 


3.00 
.60 


3.25 
.65 


3.60 

.72 


3.96 
.79 


4.12 

.82 


5.00 
1.00 


2.25 


Ream . . . . 
100 Sheets . . 


2.25 
.45 


2.44 
.49 


3.38 
.68 


3.66 
.73 


4.05 
.81 


4.46 
.89 


4.64 
.93 


5.63 
1.13 


2.50 


Ream . . . . 
100 Sheets . . 


2.50 
.50 


2.71 
.54 


3.75 

.75 


4.06 
.81 


4.50 
.90 


4.96 
.99 


5.15 
1.03 


6.25 
1.25 


2.75 


Ream . . . . 
100 Sheets . . 


2.75 
.55 


2.98 
.60 


4.13 
.83 


4.47 
.89 


4.95 
.99 


5.46 
1.09 


5.67 
1.13 


6.88 
1.38 


3.00 


Ream . . . . 
100 Sheets . . 


3.0a 

.60 


3.25 
.65 


4.50 
.90 


4.88 
.98 


5.40 
1.08 


5.94 
1.19 


6.17 
1.23 


7.50 
1.50 


3.25 


Ream . . . . 
100 Sheets . . 


3.25 
.65 


3.52 
.70 


4.88 
.98 


5.29 
1.06 


5.85 
1.17 


6.44 
1.29 


6.69 
1.34 


8.13 
1.63 


3.50 


Ream . . . . 
100 Sheets . . 


3.50 
.70 


3.79 
.76 


5.25 
1.05 


5.70 
1.14 


6.30 
1.26 


6.94 
1.39 


7.21 
1.45 


8.76 
1.75 


3.75 


Ream . . . . 
100 Sheets . . 


3.75 
.75 


4.06 
.81 


5.63 
1.18 


6.10 
1.22 


6.75 
1.35 


7.44 
1.49 


7.73 
1.55 


9.39 

1.88 


4.00 


Ream . . . . 
100 Sheets . . 


4.00 
.80 


4.33 

.87 


6.00 
1.20 


6.50 
1.30 


7.20 
1.44 


7.92 
1.58 


8.23 
1.65 


10.00 
2.00 


4.25 


Ream . . . . 
100 Sheets . . 


4.25 

.85 


4.60 
.92 


6.38 
1.28 


6.91 
1.38 


7.65 
1.53 


8.42 
1.68 


8.75 
1.75 


10.63 
2.13 


4.50 


Ream . . . . 
100 Sheets . . 


4.50 
.90 


4.87 
.97 


6.76 
1.35 


7.31 
1.46 


8.10 
1.62 


8.92 
1.78 


9.27 
1.85 


11.26 

2.25 


4.75 


Ream . . . . 
100 Sheets . . 


4.75 
.95 


5.14 
1.03 


7.14 
1.43 


7.72 
1.54 


8.55 
1.71 


9.42 

1.88 


9.79 
1.96 


11.89 

2.38 


5.00 


Ream . . . . 
100 Sheets . . 


5.00 
1.00 


5.42 
1.08 


7.50 
1.50 


8.13 
1.63 


9.00 
1.80 


9.90 
1.98 


10.29 
2.06 


12.50 
2.50 



Addenda 



291 



Paper Table, 500 Sheets to Ream 
SHOWING COST PER 100 SHEETS 20"x24" TO 30"x40"— (Continued) 



Price 
per R. 
20x24 




20x24 


20x26 


24x30 


26x30 


24x36 


25x38 


26x38 


30x40 


$5.50 


Ream . . . . 
100 Sheets . . 


$5.50 
1.10 


$5.96 
1.19 


$8.25 
1.65 


$8.94 
1.79 


$9.90 
1.98 


$10.89 
2.18 


$11.32 
2.26 


$13.75 
2.75 


6.00 


Ream . . . . 
100 Sheets . . 


6.00 
1.20 


6.50 
1.30 


9.00 
1.80 


9.75 
1.95 


10.80 
2.16 


11.87 
2.37 


12.35 

2.47 


15.00 
3.00 


6.50 


Ream . . . . 
100 Sheets . . 


6.50 
1.30 


7.04 
1.41 


9.75 
1.95 


10.56 
2.11 


11.70 
2.34 


12.86 
2.57 


13.38 
2.67 


16.25 
3.25 


7.00 


Ream . . . . 
100 Sheets . . 


7.00 
1.40 


7.58 
1.52 


10.50 
2.10 


11.38 
2.28 


12.60 

2.52 


13.85 

2.77 


14.41 

2.88 


17.50 
3.50 


7.50 


Ream . . . . 
100 Sheets . . 


7.50 
i.50 


8.12 
1.22 


11.25 
2.25 


12.19 
2.54 


13.50 

2.70 


14.84 
2.97 


15.44 
3.09 


18.75 
3.75 


8.00 


Ream . . . . 
100 Sheets . . 


8.00 
1.60 


8.66 
1.73 


12.00 
2.40 


13.00 
2.60 


14.40 

2.88 


15.83 
3.17 


16.46 
3.29 


20.00 
4.00 


8.50 


Ream . . . . 
100 Sheets . . 


8.50 
1.70 


9.20 
1.84 


12.75 
2.55 


13.81 
2.76 


15.30 
3.06 


16.82 
3.36 


17.49 
3.49 


21.25 
4.25 


9.00 


Ream . . . . 
100 Sheets . . 


9.00 
1.80 


9.75 
1.95 


13.50 
2.70 


14.63 
2.93 


16.20 
3.24 


17.81 
3.56 


18.52 
3.70 


22.50 
4.50 


9.50 


Ream . . . . 
100 Sheets . . 


9.50 
1.90 


10.29 
2.06 


14.25 
2.85 


15.44 
3.09 


17.10 
3.42 


18.80 
3.76 


19.55 
3.91 


23.75 
4.75 


10.00 


Ream . . . . 
100 Sheets . . 


10.00 
2.00 


10.83 
2.17 


15.00 
3.00 


16.25 
3.25 


18.00 
3.60 


19.79 
3.96 


20.58 
4.12 


25.00 
5.00 


10.50 


Ream . . . . 
100 Sheets . . 


10.50 
2.10 


11.37 

2.27 


15.75 
3.15 


17.06 
3.41 


18.90 
3.78 


20.78 
4.16 


21.61 
4.32 


26.25 
5.25 


11.00 


Ream . . . . 
100 Sheets . . 


11.00 
2.20 


11.91 
2.38 


16.50 
3.30 


17.88 
3.58 


19.80 
3.96 


21.77 
4.35 


22.64 
4.53 


27.50 
5.50 


11.50 


Ream . . . . 
100 Sheets . . 


11.50 
2.30 


12.45 
2.49 


17.25 
3.45 


18.69 
3.74 


20.70 
4.14 


22.76 
4.55 


23.67 
4.73 


28.75 
5.75 


12.00 


Ream . . . . 
100 Sheets . . 


12.00 
2.40 


13.00 
2.60 


18.00 
3.60 


19.50 
3.90 


21.60 
4.32 


23.75 
4.75 


24.70 
4.94 


30.00 
6.00 


12.50 


Ream . . . . 
100 Sheets . . 


12.50 
2.50 


13.54 
2.71 


18.75 
3.75 


20.31 
4.06 


22.50 
4.50 


24.74 
4.95 


25.73 
5.15 


31.25 
6.25 


13.00 


Ream . . . . 
100 Sheets . . 


13.00 
2.60 


14.08 

2.82 


19.50 
3.90 


21.13 
4.23 


23.40 
4.68 


25.73 
5.15 


26.75 
5.35 


32.50 
6.50 


13.50 


Ream . . . . 
100 Sheets . . 


13.50 
2.70 


14.62 
2.92 


20.25 
4.05 


21.94 
4.39 


24.30 
4.68 


26.72 
5.34 


27.78 
5.56 


33.75 
6.75 



292 Manual of Cost Engineering and Estimating 



Paper Table, 500 Sheets to Ream 
SHOWING COST PER 100 SHEETS 20"x24" TO 30"x40"- 



-(Continued) 



$14.00 


Ream . . 
100 Sheets 




$14.00 
2.80 


$15.16 
3.03 


$21.00 
4.20 


$22.75 
4.55 


$25.20 
5.04 


$27.71 
5.54 


$28.81 
5.76 


$35.00 
7.00 


14.50 


Ream . . 
100 Sheets 




14.50 
2.90 


15.70 
3.14 


21.75 
4.35 


23.56 
4.71 


26.10 
5.22 


28.70 

5.74 


29.84 
5.97 


36.25 

7.25 


15.00 


Ream . . 
100 Sheets 




15.00 
3.00 


16.25 
3.25 


22.50 
4.50 


24.38 
4.88 


27.00 
5.40 


29.69 
5.94 


30.87 
6.17 


37.50 
7.50 


15.50 


Ream . . 
100 Sheets 




15.50 
3.10 


16.79 
3.36 


23.25 
4.65 


25.19 
5.04 


27.90 
5.58 


30.68 
6.14 


31.90 
6.38 


38.75 
7.75 


16.00 


Ream . . 
100 Sheets 




16.00 
3.20 


17.33 
3.46 


24.00 
4.80 


26.00 
5.20 


28.80 
5.76 


31.67 
6.33 


32.93 
6.58 


40.00 
8.00 


16.50 


Ream . . 
100 Sheets 




16.50 
3.30 


17.87 
3.57 


24.75 
4.95 


26.81 
5.36 


29.70 
5.94 


32.66 
6.53 


33.96 
6.79 


41.25 

8.25 


17.00 


Ream . . 
100 Sheets 




17.00 
3.40 


18.41 
3.68 


25.50 
5.10 


27.63 
5.53 


30.60 
6.12 


33.64 
6.73 


34.99 
6.99 


42.50 
8.50 


17.50 


Ream . . 
100 Sheets 




17.50 
3.50 


18.95 
3.79 


26.25 
5.25 


28.44 
5.69 


31.50 
6.30 


34.63 
6.92 


36.02 
7.20 


43.75 
8.75 


18.00 


Ream . . 
100 Sheets 




18.00 
3.60 


19.49 
3.89 


27.00 
5.40 


29.25 
5.85 


32.40 
6.48 


35.62 
7.12 


37.04 
7.41 


45.00 
9.00 


18.50 


Ream . . 
100 Sheets 




18.50 
3.70 


20.03 
4.01 


27.75 
5.55 


30.06 
6.01 


33.30 
6.66 


36.61 

7.32 


38.06 
7.61 


46.25 
9.25 


19.00 


Ream . . 
100 Sheets 




19.00 
3.80 


20.58 
4.12 


28.50 
5.70 


30.88 
6.17 


34.20 
6.84 


37.60 

7.52 


39.10 

7.82 


47.50 
9.50 


19.50 


Ream . . 
100 Sheets 




19.50 
3.90 


21.12 

4.22 


29.25 

5.85 


31.69 
6.34 


35.10 
7.02 


38.59 

7.72 


40.12 
8.02 


48.75 
9.75 


20.00 


Ream . . 
100 Sheets 




20.00 
4.00 


21.66 
4.33 


30.00 
6.00 


32.50 
6.50 


36.00 
7.20 


39.58 
7.92 


41.16 
8.23 


50.00 
10.00 



Arranged by Frank Stone, Philadelphia 



Addenda 



293 



The "Shears Estimating Tables" 

GIVING THE COST, PER 100 SHEETS OF PAPER, COSTING FROM 
$1.00 TO $10.75 PER REAM OF 480 SHEETS 



At cost 

per 
Ream 


100 

Sheets 

cost 


At cost 

per 
Ream 


100 

Sheets 

cost 


At cost 

per 
Ream 


100 

Sheets 

cost 


At cost 

per 
Ream 


100 

Sheets 

cost 


At cost 

per 
Ream 


100 

Sheets 

cost 


At cost 

per 
Ream 


100 

Sheets 

cost 


$1.00 


$ .21 


$2.00 


.$ .42 


$3.00 


$ .63 


$4.00 


$ .84 


$5.00 


$1.05 


$6.00 


$1.25 


.1.05 


.22 


2.05 


.43 


3.05 


.64 


4.05 


.85 


5.05 


1.06 


6.25 


1.31 


1.10 


.23 


2.10 


.44 


3.10 


.65 


4.10 


.86 


5.10 


1.07 


6.50 


1.36 


1.15 


.24 


2.15 


.45 


3.15 


.66 


4.15 


.87 


5.15 


1.08 


6.75 


1.41 


1.20 


.25 


2.20 


.46 


3.20 


.67 


4.20 


.88 


5.20 


1.09 


7.00 


1.46 


1.25 


21 


2.25 


.47 


3.25 


.68 


4.25 


.89 


5.25 


1.10 


7.25 


1.52 


1.30 


.28 


2.30 


.48 


3.30 


.69 


4.30 


.90 


5.30 


1.11 


7.50 


1.57 


1.35 


.29 


2.35 


.49 


3.35 


.70 


4.35 


.91 


5.35 


1.12 


7.75 


1.62 


1.40 


.30 


2.40 


.50 


3.40 


.71 


4.40 


.92 


5.40 


1.13 


8.00 


1.67 


1.45 


.31 


2.45 


.52 


3.45 


.72 


4.45 


.93 


5.45 


1.14 


8.25 


1.72 


1.50 


.32 


2.50 


.53 


3.50 


.73 


4.50 


.94 


5.50 


1.15 


8.50 


1.78 


1.55 


.33 


2.55 


.54 


3.55 


.74 


4.55 


.95 


5.55 


1.16 


8.75 


1.83 


1.60 


.34 


2.60 


.55 


3.60 


.75 


4.60 


.96 


5.60 


1.17 


9.00 


1.88 


1.65 


.35 


2.65 


.56 


3.65 


.77 


4.65 


.97 


5.65 


1.18 


9.25 


1.93 


1.70 


.36 


2.70 


.57 


3.70 


.78 


4.70 


.98 


5.70 


1.19 


9.50 


1.98 


1.75 


.37 


2.75 


.58 


3.75 


.79 


4.75 


.99 


5.75 


1.20 


9.75 


2.04 


1.80 


.38 


2.80 


.59 


3.80 


.80 


4.80 


1.00 


5.80 


1.21 


10.00 


2.09 


1.85 


.39 


2.85 


.60 


3.85 


.81 


4.85 


1.02 


5.85 


1.22 


10.25 


2.14 


1.90 


.40 


2.90 


.61 


3.90 


.82 


4.90 


1.03 


5.90 


1.23 


10.50 


2.19 


1.95 


.41 


2.95 


.62 


3.95 


.83 


4.95 


1.04 


5.95 


1.24 


10.75 


2.24 



294 Manual of Cost Engineering and Estimating 



Proportionate Prices on Paper per Ream 

PRICE PER REAM ACCORDING TO SIZE 



















100 Sh. 


20x24 


20x25 


20x26 


20x30 


26x30 


30x40 


28x42 


25x35 


480 to R 
20x26 


$1.00 


$1.06 


$1.09 


$1.25 


$1.63 


$2.60 


$2.45 


$1.41 


$0.23 


1.10 


1.15 


1.19 


1.38 


1.79 


2.73 


2.70 


2.01 


.25 


1.20 


1.25 


1.30 


1.50 


1.96 


3.00 


2.94 


2.19 


.28 


1.30 


1.36 


1.41 


1.63 


2.12 


3.25 


3.19 


2.37 


.30 


1.40 


1.46 


1.52 


1.75 


2.28 


3.50 


3.43 


2.56 


.32 


1.50 


1.57 


1.63 


1.88 


2.44 


3.75 


3.68 


2.74 


.34 


1.60 


1.67 


1.74 


2.00 


2.60 


4.00 


3.92 


2.93 


.37 


1.70 


1.77 


1.84 


2.13 


2.77 


4.25 


4.17 


3.10 


.39 


1.80 


1.88 


1.96 


2.25 


2.93 


4.50 


4.41 


3.28 


.41 


1.90 


1.98 


2.00 


2.38 


3.09 


4.76 


4.66 


3.47 


.43 


2.00 


2.09 


2.13 


2.50 


3.25 


5.00 


4.90 


3.65 


.45 


2.10 


2.19 


2.28 


2.63 


3.41 


5.25 


5.15 


3.83 


.48 


2.20 


2.30 


2.39 


2.75 


3.63 


5.50 


5.39 


4.01 


.50 


2.30 


2.40 


2.50 


2.88 


3.74 


5.75 


5.64 


4.20 


.52 


2.40 


2.50 


2.60 


3.00 


3.90 


6.00 


5.88 


4.38 


.54 


2.50 


2.61 


2.71 


3.13 


4.07 


6.25 


6.13 


4.56 


.57 


2.60 


2.71 


2.82 


3.25 


4.23 


6.50 


6.37 


4.74 


.59 


2.70 


2.82 


2.93 


3.38 


4.39 


6.75 


6.62 


4.92 


.61 


2.80 


2.92 


3.04 


3.50 


4.55 


7.00 


6.86 


5.11 


.64 


2.90 


3.02 


3.15 


3.63 


4.71 


7.25 


7.11 


5.29 


.66 


3.00 


3.12 


3.25 


3.75 


4.88 


7.50 


7.35 


5.47 


.68 


3.10 


3.23 


3.36 


3.88 


5.04 


7.75 


7.60 


5.66 


.70 


3.20 


3.34 


3.47 


4.00 


5.20 


8.00 


7.84 


5.84 


.73 


3.30 


3.44 


3.58 


4.13 


5.36 


8.25 


8.09 


6.02 


.75 


3.40 


3.55 


3.68 


4.25 


5.52 


8.50 


8.33 


6.20 


.77 


3.50 


3.65 


3.75 


4.38 


5.69 


8.75 


8.58 


6.38 


.79 


3.60 


3.75 


3.90 


4.50 


5.85 


9.00 


8.82 


6.56 


.82 


3.70 


3.86 


4.01 


4.63 


6.01 


9.25 


9.07 


6.75 


.84 


3.80 


3.96 


4.12 


4.75 


6.18 


9.50 


9.31 


6.93 


.86 


3.90 


4.07 


4.22 


4.88 


6.34 


9.75 


9.66 


7.11 


.88 


4.00 


4.17 


4.33 


5.00 


6.50 


10.00 


9.80 


7.30 


.90 


4.10 


4.27 


4.44 


5.13 


6.66 


10.25 


10.06 


7.48 


.93 


4.20 


4.38 


4.55 


5.25 


6.83 


10.50 


10.29 


7.66 


.95 


4.30 


4.48 


4.66 


5.38 


6.98 


10.75 


10.54 


7.84 


.97 


4.40 


4.59 


4.77 


5.50 


7.15 


11.00 


10.75 


8.02 


1.00 


4.50 


4.69 


4.88 


5.63 


7.31 


11.25 


11.03 


8.21 


1.02 


4.60 


4.79 


4.98 


6.75 


7.48 


11.50 


11.27 


8.39 


1.04 


4.70 


4.90 


5.09 


5.88 


7.64 


11.75 


11.52 


8.57 


1.06 


4.80 


5.00 


5.20 


6.00 


7.80 


12.00 


11.73 


8.75 


1.08 


4.90 


5.11 


5.31 


6.13 


7.96 


12.25 


12.01 


8.94 


1.11 


5.00 


5.21 


5.42 


6.25 


8.13 


12.50 


12.25 


9.12 


1.13 



Arranged by F. G. Smith, Toronto, Canada 



Addenda 



295 



Paper Table 

COST OF 1000 SQUARE INCHES 



500Shts 
to Ream 


20x24 


20x25 


20x26 


20x30 


24x30 


24x36 


25x38 


26x30 


26x38 


30x40 


$1.00 


00.42 


00.4 


00.38 


00.34 


00.28 


00.23 


00.21 


00.26 


00.2 


00.17 


1.25 


00.52 


00.5 


00.48 


00.42 


00.35 


00.27 


00.26 


00.32 


00.25 


00.21 


1.50 


00.63 


00.6 


00.58 


00.5 


00.42 


00.35 


00.32 


00.38 


00.3 


00.25 


1.75 


00.73 


00.7 


00.67 


00.58 


00.49 


00.41 


00.37 


00.45 


00.35 


00.29 


2.00 


00.83 


00.8 


00.77 


00.67 


00.56 


00.46 


00.42 


00.51 


00.4 


00.33 


2.25 


00.94 


00.9 


00.87 


00.75 


00.63 


00.52 


00.47 


00.58 


00.46 


00.38 


2.50 


01.0 


01.0 


00.96 


00.83 


00.69 


00.58 


00.53 


00.64 


00.51 


00.42 


2.75 


01.1 


01.1 


01.1 


00.92 


00.76 


00.64 


00.58 


00.71 


00.56 


00.46 


3.00 


01.3 


01.2 


01.2 


01.0 


00.83 


00.69 


00.63 


00.77 


00.61 


00.5 


3.25 


01.4 


01.3 


01.3 


01.1 


00.89 


00.75 


00.68 


00.83 


00.66 


00.54 


3.50 


01.5 


01.4 


01.3 


01.2 


00.97 


00.81 


00.74 


00.9 


00.71 


00.58 


3.75 


01.6 


01.5 


01.4 


01.3 


01.0 


00.87 


00.79 


00.96 


00.76 


00.63 


4.00 


01.7 


01.6 


01.5 


01.3 


01.1 


00.93 


00.84 


01.0 


00.81 


00.67 


4.25 


01.8 


01.7 


01.6 


01.4 


01.2 


00.98 


00.89 


01.1 


00.86 


00.71 


4.50 


01.8 


01.8 


01.7 


01.5 


01.3 


01.0 


00.95 


01.2 


00.91 


00.75 


4.75 


02.0 


01.9 


01.8 


01.6 


01.3 


01.1 


01.0 


01.2 


00.96 


00.79 


5.00 


02.1 


02.0 


01.9 


01.7 


01.4 


01.2 


01.1 


01.3 


01.0 


00.83 


5.50 


02.3 


02.2 


02.1 


01.8 


01.5 


01.3 


01.2 


01.4 


01.1 


00.92 


6.00 


02.5 


02.4 


02.3 


02.0 


01.7 


01.4 


01.3 


01.5 


01.2 


01.0 


6.50 


02.7 


02.6 


02.5 


02.2 


01.8 


01.5 


01.4 


01.7 


01.3 


01.1 


7.00 


02.9 


02.8 


02.7 


02.3 


01.9 


01.6 


01.5 


01.8 


01.4 


01.2 


7.50 


03.1 


03.0 


02.9 


02.5 


02.1 


01.7 


01.6 


01.9 


01.5 


01.3 


8.00 


03.3 


03,2 


03.1 


02.7 


02.2 


01.9 


01.7 


02.1 


01.6 


01.3 


8.50 


03.5 


03.4 


03.3 


02.8 


02.4 


02.0 


01.8 


02.2 


01.7 


01.4 


9.00 


03.8 


03.6 


03.5 


03.0 


02.5 


02.1 


01.9 


02.3 


01.8 


01.5 


9.50 


04.0 


03.8 


03.7 


03.2 


02.6 


02.2 


02.0 


02.4 


01.9 


01.6 


10.00 


04.2 


04.0 


03.8 


03.3 


02.8 


02.3 


02.1 


02.6 


02.0 


01.7 



Arranged by II. L. Siorlz, Philadelphia 

COST OF REAM— 1000 INCHES— ONE SHEET 



Price per Ream 


Cost per 1000 


Cost per Sheet 


20x24 


Square Inches 


20x24 


$2.00 


.0083 


.0042 


2.50 


.01 


.0053 


3.00 


.013 


.0063 


3.50 


.014 


.0073 


4.00 


.017 


.0084 


4.50 


.019 


.0094 


5.00 


.021 


.01 


5.50 


.023 


.011 


6.00 


.025 


.012 


6.50 


.027 


.014 


7.00 


.029 


.015 



Arranged by E. J. Schweitle, Philadelphia 



296 Manual of Cost Engineering and Estimating 



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302 Manual of Cost Engineering and Estimating 



Cost of 1000 Running Inches Strip Paper, width %" to 2" 

BASIS 24"x36". 25 POUND, 480 SHEETS TO REAM PRICE PER POUND 
AS GIVEN IN CENTS 



Per Pound 


Vs" 


H" 


7/" 

X8 


1" 


%m 


1%" 


m v 


1%" 


2" 


5c 


.2 


.23 


.26 


.3 


.34 


.4 


.46 


.52 


.6 


&y 2 c 


.21 


.25 


.29 


.34 


.38 


.42 


.5 


.58 


.68 


6c 


.22 


.27 


.32 


.36 


.4 


.44 


.54 


.64 


.72 


6^c 


.25 


.3 


.34 


.39 


.44 


.5 


.6 


.68 


.78 


7c 


.26 


.31 


.36 


.42 


.47 


.52 


.62 


.72 


.84 


7V 2 c 


.28 


.34 


.39 


.45 


.51 


.56 


.68 


.78 


.9 


8c 


.3 


.36 


.43 


.49 


.55 


.6 


.72 


.86 


.98 


8^c 


.32 


.38 


.45 


.51 


.57 


.64 


.76 


.9 


1.0 


9c 


.34 


.41 


.48 


.54 


.61 


.68 


.82 


.96 


1.1 


9Mc 


.36 


.43 


.51 


.58 


.65 


.72 


.86 


1.0 


1.2 


10c 


.38 


.45 


.53 


.6 


.68 


.76 


.9 


1.1 


1.2 



Arranged by H. L. Stortz, Philadelphia 



Cost of 1000 Running Inches Strip Paper, width %" to 2" 



BASIS 24"x36' 



30 POUND, 480 SHEETS TO REAM. PRICE PER POUND 
AS GIVEN IN CENTS 



Per Pound 


Vs" 


W! 


Vs" 


1" 


IH" 


IK" 


IK" 


l%" 


2" 


5c 


.22 


.27 


.31 


.36 


.4 


.44 


.54 


.62 


.72 


5^c 


.25 


.3 


.34 


.39 


.44 


.5 


.6 


.68 


.78 


6c 


.28 


.33 


.39 


.44 


.5 


.56 


.66 


.78 


.88 


63^c 


.3 


.36 


.42 


.47 


.53 


.6 


.72 


.84 


.94 


7c 


.32 


.38 


.45 


.51 


.57 


.64 


.76 


.9 


1.0 


7^c 


.34 


.41 


.48 


.54 


.61 


.68 


.82 


.96 


1.1 


8c 


.36 


.43 


.51 


.58 


.65 


.72 


.86 


1.0 


1.2 


8^c 


.38 


.46 


.54 


.61 


.69 


.76 


.92 


1.1 


1.2 


9c 


.41 


.49 


.57 


.65 


.73 


.82 


.98 


1.1 


1.3 


9^c 


.43 


.51 


.6 


.68 


.77 


.86 


1.0 


1.2 


1.4 


10c 


.46 


.55 


.64 


.73 


.82 


.92 


1.1 


1.3 


1.5 



Arranged by H. L. Stortz, Philadelphia 



Addenda 



303 



Cost of 1000 Running Inches Strip Paper, width' %" to 2" 

BASIS 24"x36". 35 POUND, 480 SHEETS TO REAM. PRICE PER POUND 
AS GIVEN IN CENTS 



Per Pound 


5 A" 


H" 


%" 


1" 


ik" 


IK" 


xw 


iK" 


2" 


5c 


.26 


.31 


.36 


.42 


.47 


.52 


.62 


.72 


.84 


5Y 2 c 


.29 


.35 


.41 


.46 


.52 


.58 


.7 


.82 


.92 


6c 


.32 


.38 


.45 


.51 


.57 


.64 


.76 


.9 


1.02 


6^c 


.35 


.42 


.49 


.56 


.62 


.7 


.84 


.98 


1.12 


7c 


.37 


.44 


.52 


.59 


.66 


.74 


.88 


1.04 


1.18 


7^c 


.4 


.48 


.56 


.64 


.72 


.8 


.96 


1.12 


1.28 


8c 


.42 


.5 


.59 


.67 


.76 


.84 


1.00 


1.18 


134 


8^c 


.45 


.54 


.63 


.72 


.81 


.9 


1.08 


1.26 


1.44 


9c 


.48 


.57 


.67 


.76 


.86 


.96 


1.14 


1.34 


1.52 


9^c 


.5 


.6 


.7 


.8 


.9 


1.0 


1.2 


1.4 


1.6 


10c 


.53 


.63 


.74 


.84 


.95 


1.06 


1.26 


1.48 


1.68 



Arranged by H. L. Siorlz, Philadelphia 



Cost of 1000 Running Inches Strip Muslin at 
Varying Widths 

BASED ON PRICE PER 1000 YARDS, 1" WIDE 
PRICE GIVEN IN CENTS 



Price per 1000 Yards 
1" Wide 


%" 


H" 


i/ii 

X8 


1" 


iw 


$2.00 


3.5 


4.2 


5.0 


5.6 


6.3 


2.50 


4.3 


5.1 


6.1 


7.0 


7.9 


3.00 


5.3 


6.3 


7.4 


8.4 


9.4 


3.50 


6.1 


7.4 


8.6 


9.8 


11.0 


4.00 


6.7 


8.1 


9.6 


11.0 


12.3 


4.50 


8.1 


9.3 


11.3 


13.0 


14.6 


5.00 


8.6 


10.2 


12.2 


14.0 


15.7 



Arranged by H. L. Storlz, Philadelphia 



304 Manual of Cost Engineering and Estimating 



COST OF 1000 RUNNING INCHES MUSLIN OR PIECE GOODS CUT 

FROM 1 YARD OF MATERIAL 24" WIDE AT PRICE PER YARD 

GIVEN AND WIDTH OF STRIP FROM A" TO 2" IN CENTS 



24" 


A" 


H" 


7/" 
X8 


1" 


IH" 


1M" 


IK" 


1%" 


2" 


Per Yard 




















5c 


3.6 


4.3 


5.0 


5.8 


6.5 


7.2 


8.6 


10.0 


12.0 


5^c 


4.0 


4.8 


5.6 


6.4 


7.2 


8.0 


9.6 


11.2 


12.8 


6c 


4.4 


5.2 


6.1 


7.0 


7.8 


8.8 


10.4 


12.2 


14.0 


6^c 


4.8 


5.6 


6.9 


7.5 


8.5 


9.6 


11.2 


13.8 


15.0 


7c 


5.1 


6.1 


7.1 


8.1 


9.1 


10.2 


12.2 


14.2 


16.2 


iy 2 c 


5.4 


6.5 


7.6 


8.6 


9.7 


10.8 


13.0 


15.2 


17.1 


8c 


5.8 


7.0 


8.1 


9.3 


10.6 


11.6 


14.0 


16.2 


18.6 


8^c 


6.2 


7.4 


8.6 


9.8 


11.1 


12.3 


14.8 


17.2 


19.6 


9c 


6.5 


7.8 


9.1 


10.4 


11.7 


13.0 


15.6 


18.2 


20.8 


9^c 


6.9 


8.2 


9.6 


10.7 


12.3 


13.8 


16.4 


19.2 


21.4 


10c 


7.2 


8.6 


10.0 


11.5 


13.0 


14.4 


17.2 


20.0 


23.0 



Arranged by H. L. Storiz, Philadelphia 



COST OF 1000 RUNNING INCHES MUSLIN OR PIECE GOODS CUT 

FROM 1 YARD OF MATERIAL 30" WIDE AT PRICE PER YARD 

GIVEN AND WIDTH OF STRIP FROM A" TO 2" IN CENTS 



30" 


A" 


'%" 


78 


1" 


IK" 


IK" 


IK" 


l s A" 


2" 


Per Yard 




















5c 


2.9 


3.5 


4.1 


4.6 


5.2 


5.8 


7.0 


8.2 


9.2 


5^c 


3.2 


3.8 


4.5 


5.1 


5.7 


6.4 


7.6 


9.0 


10.2 


6c 


3.5 


4.2 


4.9 


5.6 


6.2 


7.0 


8.4 


9.8 


11.2 


6^c 


3.8 


4.5 


5.3 


6.0 


6.8 


7.6 


9.0 


10.6 


12.0 


7c 


4.1 


4.9 


5.7 


6.5 


7.3 


8.2 


9.8 


11.4 


13.0 


iy 2 c 


4.3 


5.2 


6.1 


6.9 


7.8 


8.6 


10.4 


12.2 


13.8 


8c 


4.6 


5.6 


6.5 


7.4 


8.3 


9.2 


11.2 


13.0 


14.8 


8^c 


4.9 


5.9 


6.9 


7.9 


8.9 


9.8 


11.8 


13.8 


15.8 


9c 


5.2 


6.3 


7.3 


8.3 


9.4 


10.4 


12.6 


14.6 


16.6 


9^c 


5.5 


6.6 


7.7 


8.8 


9.9 


11.0 


13.2 


15.4 


17.6 


10c 


5.8 


6.9 


8.1 


9.3 


10.1 


11.6 


13.8 


16.2 


18.6 



Arranged by H. L. Storiz, Philadelphia 



Addenda 



305 



COST OF 1000 RUNNING INCHES MUSLIN OR PIECE GOODS CUT 

FROM 1 YARD OF MATERIAL 36" WIDE AT PRICE PER YARD 

GIVEN AND WIDTH OF STRIP FROM %" TO 2" IN CENTS 



36" 


5 A" 


%" 


•7 /It 

X8 


1" 


w 


1H" 


W 


l%" 


2" 


Per Yard 




















5c 


2.4 


2.9 


3.4 


3.9 


4.3 


4.8 


5.8 


6.8 


7.8 


5Y 2 c 


2.7 


3.2 


3.7 


4.2 


4.8 


5.4 


6.4 


7.4 


8.4 


6c 


2.9 


3.5 


4.0 


4.6 


5.2 


5.8 


7.0 


8.0 


9.2 


6^c 


3.1 


3.8 


4.4 


5.0 


5.6 


6.2 


7.6 


8.8 


10.0 


7c 


3.4 


4.1 


4.7 


5.4 


6.1 


6.8 


8.2 


9.4 


10.8 


7j^c 


3.6 


4.3 


5.1 


5.8 


6.5 


7.2 


8.6 


10.2 


11.6 


8c 


3.9 


4.6 


5.4 


6.2 


6.9 


7.8 


9.2 


10.8 


12.4 


8^c 


4.1 


4.9 


5.7 


6.6 


7.4 


8.2 


9.8 


11.4 


13.2 


9c 


4.3 


5.2 


6.1 


6.9 


7.8 


8.6 


10.4 


12.2 


13.8 


9^c 


4.6 


5.5 


6.4 


7.3 


8.2 


9.2 


11.0 


12.8 


14.6 


10c 


4.8 


5.8 


6.8 


7.7 


8.7 


9.6 


11.6 


13.6 


15.4 



Arranged by H. L. Slorlz, Philadelphia 



306 Manual of Cost Engineering and Estimating 

Box Twine Table 

COST PER 1000 RUNNING INCHES AT PRICE PER POUND 
AS GIVEN IN CENTS 



Price per lb. 


10c 


lie 


12c 


13c 


14c 


15c 


16c 


17c 


18c 


19c 


20c 


21c 


22c 


23c 


24c 


25c 


2-Ply Box 


































4700" to lb. . . 


2.1 


2.3 


2.6 


2.8 


3.0 


3.2 


3.4 


3.6 


3.8 


4.0 


4.3 


4.5 


4.7 


4.9 


5.1 


5.3 


3-Ply Box 


































3100" to lb. . . 


3.2 


3.5 


3.9 


4.2 


4.5 


4.8 


5.2 


5.5 


5.8 


6.1 


6.5 


6.8 


7.1 


7.4 


7.7 


8.1 


3-Ply Jute 


































8600" to lb. . . 


1.2 


1.3 


1.4 


1.5 


1.6 


1.7 


1.9 


2.0 


2.1 


2.2 


2.3 


2.4 


2.6 


2.7 


2.8 


2.9 


4-Ply Jute 


































6500" to lb. . . 


1.5 


1.7 


1.8 


2.0 


2.2 


2.3 


2.5 


2.6 


2.7 


2.9 3. 


3.2 


3.4 


3.5 


3.7 


3.8 


5-Ply Jute 


































5200" to lb. . . 


1.9 


2.1 


2.3 


2.5 


2.7 


2.9 


3.1 


3.3 


3.5 


3.7 


3.8 


4.0 


4.2 


4.4 


4.6 


4.8 


6-Ply Jute 


































4500" to lb. . . 


2.2 


2.4 


2.7 


2.9 


3.1 


3.3 


3.5 


3.8 


4.0 


4.2 


4.4 


4.7 


4.9 


5.1 


5.3 


5.6 



Arranged by H. L. Slortz, Philadelphia 



COST PER 1000 RUNNING INCHES OF METAL EDGE AT PRICE 
PER 100 FEET AS GIVEN IN CENTS 



Price per 100 Ft. 


28c 


30c 


32^c 


35c 


36c 


Price per 1000 Ft. 


23.4 


25.0 


28.0 


29.2 


30.0 



Arranged by H. L. Slortz, Philadelphia 



COST PER 1000 RUNNING INCHES OF METAL STITCH WIRE 
AT PRICE PER POUND AS GIVEN IN CENTS 





10c 


lie 


12c 


13c 


14c 


15c 


16c 


17c 


18c 


20c 


No. 8x104—363 feet 






















(4356") to lb 


2.3 


2.5 


2.8 


3.0 


3.2 


3.4 


3.7 


3.9 


4.1 


4.6 


No. 11x104—256 feet 






















(3072") to lb 


3.3 


3.6 


3.9 


4.2 


4.6 


4.9 


5.2 


5.5 


5.9 


6.6 


No. 14x104—200 feet 






















(2400") to lb 


4.2 


4.6 


5.0 


5.4 


5.8 


6.3 


6.7 


7.1 


7.5 


8.4 


No. 20x25—416 feet 






















(4992") to lb 


2.0 


2.2 


2.4 


2.6 


2.8 


3.0 


3.2 


3.4 


3.6 


4.0 


No. 23x 30—714 feet 






















(8568") to lb 


1.2 


1.3 


1.4 


1.5 


1.6 


1.8 


1.9 


2.0 


2.1 


2.4 



Arranged by H. L. Slortz, Philadelphia 



Addenda 307 

Glue and Gum 

The result of the tabulation of the data gathered by the com- 
mittee on the subject of Glue and Gum showed a very wide 
variation. This was to be expected in view of the large variety 
of work done and conditions prevailing. The difference in cost 
per pound of glue or gum and the difference in quality of the 
same; all these conditions contributed to make a large variation 
in results. 

Gum — The committee found that in the use of gum, figuring 
the cost per 100 sheets paper 20 x 24, the tabulation showed a mini- 
mum cost of 8 cents per 100 sheets and a maximum of $1.00 
per 100 sheets 20 x 24. Owing to the large variation in data it 
was therefore considered advisable to use the data showing the 
surface which 1 pound of dry glue or gum would cover. The 
result of this tabulation showed that 1 pound of dry gum would 
be used to cover a minimum of 18,000 square inches to a maxi- 
mum of 60,000 square inches of paper. From this data the com- 
mittee established an average of 24 oz. of dry gum to 100 sheets 
of paper 20x24, or 7% pounds of dry gum to 1 ream of 500 
sheets paper 20 x 24. 

Glue — The same wide difference in the data received on glue 
was shown. The tabulation showed on the basis of cost per 100 
sheets of paper 20 x 24 minimum of 10 cents per 100 sheets and a 
maximum of $1.25 per 100 sheets. 

The data showing surface covered by 1 pound of dry glue 
showed a minimum of 16,000 square inches and a maximum of 
60,000 square inches. From this data the committee established 
an average of 24 oz. dry glue to 100 sheets of paper, basis 20 x 24 
or l x k pounds of dry glue to a ream of 500 sheets of paper 20 x 24. 

The cost committee therefore recommends that these figures 
be used as an average in calculating the surface covered by gum 
and glue. From this it will be seen that in calculating the cost 
of glue and gum, multiply the cost per pound of material by 
7% to get the cost of adhesive to cover 1 ream of 500 sheets of 
paper 20 x 24. 

For example: If you are paying 20 cents per pound for 
glue the cost would be 1V 2 x 20 or $1.50 per ream 20 x 24. These 
figures are given merely as an average obtained by tabulation of 
data collected. 

In estimating — The conditions prevailing in the work being 
done should be considered, as the amount of gum or glue will 
vary, depending on the quality of glue or gum, on the nature of 
the work, quality of paper, board, and the skill of the operator. 

JOINT COST COMMITTEE, 
National Federation Paper Box Manufacturers Association. 

H. L. Stortz, Secretary. 



308 Manual of Cost Engineering and Estimating 

Waste and Spoilage 

The "Questionnaire" sent by the committee to the subscribers 
on the subject of waste and spoilage resulted in replies showing 
a wide difference on the data. 

The tabulation of the data collected showed following re- 
sults : 

Where an average per cent on all materials was given, the 
minimum shown was 3 per cent, the maximum 15 per cent. 

Where board was itemized the minimum was 2%, maximum 

5%. 

Where paper was itemized the minimum was 3%, maximum 
10%. 

Where operations were specified the result was as follows: 

Stayers, 1 to 3 per cent. 

Enders, 1 to 10 per cent. 

Strip Cover Machine, 7 to 12 per cent. 

Stokes & Smith Machine, 5 to 15 per cent. 

Toppers, 7 to 12 per cent. 

Where quantities were specified the data was as follows: 
Lots of 100 or less, 10 to 25 per cent. 
Lots of 1000 or less, 5 to 10 per cent. 
Lots of 5000 or over, 2 to 5 per cent. 

The subject of the committee in gathering this data was to 
endeavor to establish an average percentage that should be added 
to all calculation of materials to cover waste and spoilage. 

The committee after due consideration of the entire subject, 
considered it inadvisable to attempt in its recommendations to 
divide the waste and spoilage with reference to class of ma- 
terials and product, as this was a matter that would necessarily 
have to be considered by the estimator. It should be evident to 
the practical box manufacturer that in estimating the conditions 
prevailing in the work, should be considered. 

However, the committee recommends that a minimum of 5 
per cent should be established as an average to be added to all 
calculations of materials to cover the item of waste and spoilage. 

JOINT COST COMMITTEE, 
National Federation Paper Box Manufacturers Association. 

H. L. Stortz, Secretary. 



INDEX 

PAGE 

Abbreviations, Suggested 266 

Absence of Employes, Expensive, but Preventable 216 

Accuracy, Degree Required for Practicability 35 

Accuracy, To What Degree Important 132 

Action and Reaction, Law of 90 

Addenda 237 

Administration Expenses, Factory and Commercial 134 

Advanced Methods, Necessity for 45 

Advantages of Knowing Cost 37 

Analysis and Autopsy, Definitions and Contrast 219 

Apathy, a Cause of Failure 223 

"Atmosphere" as an Influence on Efficiency 142 

Authority and Responsibility 211 

Average Cost Rates, Determination and Use of 237 

Average the Only Safe Basis for Estimating 145 

Average, Yearly, How Determined 101 

Averages, Stability of, When Correctly Determined 142 

Averages, When Practical 97 

Board Table, Giving Cost per 100 Sheets 277 

Bottom Label Print Paper, Price List on 263 

Box Board Equivalents, Handy Table 274 

Box Board Mfrs. Assn., Rules and Regulations 250 

Building Expense, Group 134 

Candy Boxes, Specimen Estimate on 248 

Carnell's Ready Reckoning 286 

Coated Board, Calculating Rules 275 

Coated Board, Weight and Cost per 1000 Sheets 276 

Commercial Administration Expenses, Group 134 

Commercial Success, Psychology of 197 

Commercial Viewpoint, Essential to Success 206 

Committees' Note 268 

Competition, Aggressive 227 

Composite Average Cost Rates, Determination and Use of 237 

Composite Average Cost Rates, Table Showing 239 

Conceit, the Offspring of Ignorance 225 

Conservation That Wastes 227 

Contractor's Expensive Ignorance 178 

Cooperation, Essential in Modern Business 210 

Corners, Manila, Price List on 263 

Cost Accounting, Inconsistency of 192 

Cost, a Crime to Sell Goods Below 174 

Cost, a Result of Conditions, Not Figures 141 

Cost, Cause of Variation 95 

Cost Clerk, Duties of 126 



310 Manual of Cost Engineering and Estimating 



PAGE 

Cost, Comparison with Estimate 128 

Cost, Definition of 27 

Cost Engineer, Qualifications of 112 

Cost Engineering, Advantages of 121 

Cost Engineering Compared with Cost Accounting 53 

Cost Engineering, Meets Requirements of Industry 69 

Cost, Factors of 55 

Cost, Final Step in Determination of 139 

Cost Memorandum, Designing Form 118 

Cost Memorandum, Use of 127 

Cost Memorandums, Disposition of 128 

Cost per 1,000 Pieces, Time Saver for Estimating 145 

Cost Rates, When Comparisons are Practical 143 

Cost Record, Monthly (Summary) 119 

Cost Records, Purpose of 55 

Cost, Standardization Impossible 191 

Cost Summary a Guide to Administration 40 

Cost System Forms, Why Not Shown 114 

Cost System, Functions of 105 

Cost System Installation, Factors for Success in 112 

Cost System Installation, Making the Plan 114 

Cost System Installation, The Survey 113 

Cost System, Installing a 123 

Cost System, Peculiar Conceptions of 93 

Cost System, Planning a Ill 

Cost Systems, Standard, Limitations of 191 

Cost, Unchangeable after Product is Completed 91 

Credit, Determination of 43 

Daily Time Report, Cost Clerk's Method of Handling 127 

Daily Time Report, Procedure of Making 125 

Daily Time Report, Value and Use of 126 

Delivery Expenses 135 

Depreciation, Joint Cost Committee Recommendations 249 

Determination and Use of Composite Average Cost Rates 237 

Direct Expenses 136 

Directions for Ordering Box Board 251 

Drive for Business may Destroy Profit 38 

Effect of Small Orders 39 

Efficiency, Defined 82 

Engineer, the Man of the Future 201 

Equalization Tables, Box Board 274 

Equipment Expense, Group 134 

Essentials of Cost System 49 

Estimate on Box, Stayed and Covered on Stripping Machine.. 73 
Estimate on Box, Stayed and Covered on S. & S. Machine 74 



Index 311 



PAGE 

Estimate on Candy Boxes, Specimen 248 

Estimate on Ladies' Shoe Boxes, Specimen 245 

Estimate on Ladies' Hosiery Boxes, Specimen 246 

Estimate on Millinery Boxes, Specimen 244 

Estimate on Shirt Boxes, Specimen 247 

Estimate, Plain Box and Lid, Stayed Only 72 

Estimates by Accounting Methods, Examples of 60 

Estimates by Accounting Methods, Weaknesses of 67 

Estimates by Cost Engineering Methods, Examples of 71 

Estimates, Importance of Checking by Costs 148 

Estimating Blank, Suggestions for 146 

Estimating, Practical 141 

Estimating, Safe Short Cuts in 257 

Estimating System Provided by Correct Cost System 59 

Estimating Time Bequired for Given Production 144 

Estimating, Uniform Blanks Not Practical for Trade 146 

Estimator, Data for 150 

Executives, Organization of 212 

Expansion, Evils of 167 

Expense Distribution, Fundamental Principle of 132 

Expense Distribution, Inadequacy of Accounting Methods.... 59 

Expense Distribution Methods, Explanation of 56 

Expense Distribution on Man Hours 58 

Expense Distribution on Material Cost 57 

Expense Distribution on Labor Cost 58 

Expense Distribution on Prime Cost 58 

Expense Grouping, Bule for 120 

Expense Groupings, Suggested 134 

Expenses, All Elemental, None Basic 130 

Expenses, Arrangement of, For Beady Use 129 

Expenses, Bases for Distribution 137 

Expenses, Building, Composition and Distribution of 131 

Expenses, Direct and Indirect, Defined 129 

Expenses, List of 33 

Extra Charges (Box Board Mfrs. Assn.) 253 

Factory Administration Expenses, Group 134 

Factory Operation, Purpose of 88 

Failure, Causes of 206 

Failure, Few Who Fail Know Cause 221 

Failure, Frequently Avoidable 221 

"Fair Deal," The 28 

Fear, Cost System Helps to Dispel 204 

Fillers, a Serious Menace 213 

Financing the Experiments of Others 39 

Forces of the Universe Invisible 222 



312 Manual of Cost Engineering and Estimating 



PAGE 

Formulae, Danger of Adopting 20 

Gauge Lists for Box Boards 269 

Generalization of Expense Not Permissible 80 

Getting the Most Out of Your Business 209 

Girls Hand Work, Cost of (Chart) 102 

Glue, Cost per 100 Sheets Paper 20 x 24 .307 

Good Will, Definition 199 

Greatest Present Need, The 26 

Gum, Cost per 100 Sheets Paper 20 x 24 307 

Health, Importance of 217 

Hinges, Cloth, Price List. 262 

Hosiery Boxes, Ladies', Specimen Estimate on 246 

Hours Record, Form of 118 

Hours Record, Purpose of 118 

Ideal Cost System, Definition of 55 

Ignorance an Underlying Cause of Failure 222 

Impressions, Wrong, Serious Effect of 104 

Inaccuracy, Relative Importance in Rate and Result 123 

Insolvency, Sometimes Exists When Not Realized 123 

Labor and Other Expenses Not Related (Chart) 78-79 

Labor and Other Expenses Not Related (Table) 77 

Lace, Price List on 262 

Ladies' Hosiery Boxes, Specimen Estimate on 246 

Ladies' Shoe Boxes, Specimen Estimate on 245 

Light and Toilet Expenses, Group 134 

Lighting Expense, Explanation of Benefits 138 

Limitations of Individual Effort 210 

Looking through the Wrong End of Telescope 233 

Losses, by Fire and Failure 172 

Losses, Corporation Officers' Responsibility for 175 

Machine Introduction, Effect of 47 

Machine Ratings, Maker's Not Always Practical 108 

Management, Efficient and Inefficient Contrasted 148 

Managers, Why Mechanics Make Poor 88 

Manufacturing and Merchandising Contrasted 197 

Market Price 161 

Materials, Defined , 116 

Materials, Expense of, How Applied. 154 

Materials, List of 150 

Materials Used in Stiff Boxes 32 

Mental Impressions, Effect of 204 

Merchandise Expenses, Group 135 

Metal Edge, Cost per 1000 Running Inches 306 

Methods found by Committee Investigation, Variety of 55 

Millinery Boxes, Specimen Estimates on 244 



Index 313 



PAGE 

Mind and Muscle, Relative Value of 200 

Muslin, Stay, Cost per 1000 Running Inches 298 

Muslin Strip, Cost per 1000 Running Inches 303 

(Rasis 1000 Yards 1" Wide) 

Muslin Strip, Cost per 1000 Running Inches 304 

(Rasis 24", Piece Goods) 

Muslin Strip, Cost per 1000 Running Inches 304 

(Rasis 30", Piece Goods) 

Muslin Strip, Cost per 1000 Running Inches 305 

(Rasis 36", Piece Goods) 

Natural Price and Cost 160 

Object of Manual 17 

Odd Sizes, Rules for Figuring Weight of 273 

Old Conditions and New Compared 45 

Operations of Paper Rox Manufacture, List of 151 

Order Rlank for Rox Roards 254 

Order Rlank for Paper 256 

Order Form, for Roxes 264 

Ordering Rox Roard, Directions for 251 

Organization of Factory Executives 212 

Packing Expenses 135 

Paper Equivalentor 286 

Paper for 1000 Roxes, Rule for Ascertaining 288 

Paper, Stay, Cost per 1000 Running Inches 298 

Paper Table, Cost of Ream, 1000 in., One Sheet 295 

Paper Table, Cost per 1000 Running Inches 302 

(480 Sheets to Ream, 30 lb.) 
Paper Table, Cost per 1000 Running Inches 302 

(480 Sheets to Ream, 25 lb.) 
Paper Table, Cost per 1000 Running Inches 303 

(480 Sheets to Ream, 35 lb.) 

Paper Table, Cost per 1000 Square Inches 295 

Paper Table, Proportionate Prices per Ream 294 

Paper Table, Showing Cost per 100 Sheets (500 to Rm.) 290 

Paper Table, Showing Cost per 100 Sheets (480 to Rm.) 293 

Paper Table, Showing Strips that can be Cut from Sheet. .300-301 

Paper Table, Strip 289 

Paper Tables, Equivalent Weights 285-286 

Paper Trade Customs 254 

Paper, Trim, Cost per 1000 Running Inches 296-297 

Partners, Opinion as to Choice of 205 

Pay Roll Record, Form of 119 

Peak Load, Providing for 167 

Percentages and Profits, Figuring 177 

Percentages in Price Making, Weakness of 50 



314 Manual of Cost Engineering and Estimating 



PAGE 

Percentages, Relatively Few can Figure 177 

Percentages, Rules for Using Correctly 187 

Percentages, Wrong Methods Destroy Profits 180 

Perpetual Inventory, Scope and Advantages of 117 

Piecework Rates, How Determined 84 

Piecework Wages, Not a Basis of Cost 154 

Pitfalls in the Pathway to Profits 221 

Power Expense, Group 134 

Practicable Methods, Defined 52 

Precedents, Worship of 228 

Preface 3 

Price Agreements 159 

Price, A Scientific Proposition 171 

Price List on Lace 262 

Price Lists, Long, How to Figure 182 

Price-Making, Importance of 146 

Price, Market 161, 165 

Prices and Production Differ in Factory and Farm 168 

Prices, Buying Stimulated by Advances in 170 

Prices, The Community's Interest in. 172 

Prices, Unsound Condition in Manufacture 169 

Principle, Mistaking Mechanism for 189 

Principles, Mistaking Formulae for 132 

Process Time and Personal Time 85 

Processes, Machine and Manual, Difference Between 85 

Procrastination, a Cause of Failure 224 

Production Record, Practical Forms for 106 

Production Records, Compilation and Use of 103 

Production Records, Functions of 106 

Production Records, Why Sometimes Unpopular 110 

Profitableness of Effort, a Guide to Desirability 154 

Profit and Price, Relation of 49 

Profit Figuring, Schools Teach Incorrectly 184 

Profit, Its Relation to Price 203 

Profit, the Vital Factor of Business 203 

Profit, Ways of Increasing 203 

Profits and Percentages, Figuring 177 

Profits, Confused with Dividends 180 

Profits, Pitfalls in the Pathway to 221 

Profits, Rule for Figuring 179, 186 

Proportionate Prices on Paper per Ream 294 

Psychology of Commercial Success, The 197 

Quick Calculating Average Tables 274 

Raw Material Defined 84 

Ream Weight Tables 272-273 



Index 315 



PAGE 

Records a Foundation for Estimating 40 

Report of Joint Cost Committee 54 

Requisition System, Value of 117 

Reservations (Box Board Rules) 252 

Resolution Authorizing Manual 5 

Responsibility and Authority 211 

Responsibility Without Authority, a Pitfall 230 

Results, Demanding Without Providing Equipment 231 

Ruinous Competition 157 

Rule for Ascertaining Number Sheets Paper for 1000 Boxes... 288 

Rules and Regulations, Box Board Mfrs. Assn 250 

Rules, Exceptions to .' 136 

Rules for Figuring Weight of Odd Sizes 273 

Safe Short Cuts in Estimating 257 

Sanitary Standards 217 

Science, Definition of ." 202 

Scoring Machines, Double, Cost of Operating (Chart) 92 

Selling, All Have Something to Sell 198 

Selling Expenses, Group 135 

Selling Prices of Paramount Importance 157 

Sentiment in Business, Armour's Opinion 216 

Service, the Factor Which Warrants Profit 198 

Sheet Lining, Tables Showing Cost of 280-284 

Sheets Paper Required for 1000 Boxes, Rule for 288 

Shipping and Delivery Expense, Suggested Method of Handling 75 

Shirt Boxes, Specimen Estimate on 247 

Shoe Boxes, Ladies' Specimen Estimate on 245 

Slide Rules 287 

Specialization of Factory Output 214 

Specialization the Order of the Times 209 

Specimen Estimates, Illustrating Use of Composite Averages. .242 

Split-Time Record, Form of 119 

Spoilage, Committee's Recommendation 308 

Stability of Organization Efficiency 142 

Standardization, by Agreement 190 

Standardization, Importance of 190 

Standards, Fundamental, Not Influenced by Agreements 190 

Standards, if Unreliable, Destroy Confidence 193 

Standards, Permanent Only When They Conform to Principles. 189 

Standards, Progressive Nature of 194 

Standards, Sanitary 217 

Stay Muslin, Cost per 1000 Running Inches 298 

Stay Paper, Cost per 1000 Running Inches, Kraft 298 

Stay Paper, Cost per 1000 Boxes or Lids 299 

Staying Machine, Quadruple, Cost of Operation (Chart) 96 



316 Manual of Cost Engineering and Estimating 



PAGE 

Staying Machines, Single, Cost of Operating (Chart) 94 

Stock Room Expenses 135 

Stokes & Smith Machines, Cost of Operating (Chart) 100 

Stoppages, Readjustments, etc., Causes of 109 

Strip Paper Table. 289 

Stripping Machines, Cost of Operating (Chart) 98 

Student, Suggestion to 80 

Success, Factors of 208 

Summary of Costs, Object of 129 

Summary, Making the 129 

Summary, Monthly, Form of 120 

Supervision Essential to All Effort 147 

Supplies, Defined 7 116 

Supply and Demand 161 

Synopsis 7 

Telescope, Looking through the Wrong End of .233 

Terms (Box Board Mfrs. Assn.) 253 

Time, All Operating Expense Elements Related to 86 

"Time and Material," Cost of 83 

"Time" Confusion with Wages in Accounting 83 

Time Element, Importance of 83 

Time Recorders, Mechanical 115 

Time Report, What it Should Cover 86 

Time Report, Purpose of .87, 89 

Time Required for Production, How Estimated 144 

Trim Paper, Cost per 1000 Running Inches 296-297 

Twine, Box, Cost per 1000 Running Inches (2 to 6 Ply) 306 

Unfair Competition, Cause of 29 

Uniform Systems Impracticable in Multiform Plants 133 

Uniformity of Factories, Non-existent 52 

Uniformity, The Fetish of 189 

Viewpoint, the Superficial, a Cause of Failure .226 

Volume of Business, Importance of Overrated 214 

Waste, Committee's Recommendation 308 

Wire, Metal Stitch, Cost per 1000 Running Inches 306 



The Denham Costf inding Co. 

CLEVELAND 

Provides Services of Experienced 

Cost Engineers for Installation 

of Cost Engineering Methods 

in Factories Making 

Product to Order 



Robert S. Denham 

CONSULTING 

COST ENGINEER 

Consultation in Connection with 

Costfinding or Production 

Methods and Conditions 

CLEVELAND, OHIO 



